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

COMMENCEMENT OF LEGAL PROCEEDINGS - type of resolution required to commence a proceeding - where proceeding is not for recovery of a body corporate debt as defined

Act, s.312; Accommodation Module, s.156(5)(b), Schedule 1.

1. The body corporate is not to continue any legal proceedings against the applicant, other a prescribed proceeding, unless such proceedings have been authorised by a valid special resolution of the body corporate in accordance with 312 of the Act.
2. The body corporate is to remove the following charges from the body corporate account of Mr Daniel Levick owner of Lot 45:

29 August 2024: $5,364.70 as "Legal Expenses - Other"

01 October 2024: $3,437.50 as "Security Equipment - Other"

01 October 2024: $1,235.00 as "Security Equipment - Other"

01 October 2024: $624.00 as "Purchased Assets - Other"

• [1] Flinders Village consists of 51 lots and common property. The Community Management Statement shows the Accommodation Module applies to the scheme.
• [2] The applicant is an owner and former member of the committee at Flinders Village. He has brought this application against the body corporate seeking three final outcomes as set out below.

That the body corporate be ordered to immediately cease all legal proceedings against Daniel Levick including but not limited to sending legal letters, issuing notices of demand, or filing lawsuits, in relation to the reimbursement of legal expenses incurred to do so.

That the body corporate remove the following charges from the body corporate account of Daniel Levick owner of Lot 45:

$38.50 - SSKB Arrears Notice Fee - 26 November 2024

and that any additional charges related to the items listed above that are charged to my account after the date of this application are also removed.

That the body corporate apply the payment I made of $1,098.20 made on 01 November 2024 against the body corporate levies for the Administration Fund, Sinking Fund and Insurance Levy.

• [3] The applicant previously sought the following interim outcomes:

• [4] That the body corporate be ordered to immediately cease and desist all legal proceedings against me, including but not limited to, sending legal letters, issuing notices of demand, or filing lawsuits, against me pending the determination of the application for final orders.

• [5] That Daniel Levick be deemed eligible to vote at any general meeting called between the date of this application and the determination of final orders notwithstanding the alleged "debt" on Mr Levick's body corporate account resulting from the misappropriation of the payment $1,098.20 made on 01 November 2024 for body corporate levies for the Administration Fund, Sinking Fund and Insurance Levy which has been credited against "Other" charges relating to the unlawful legal action taken by the body corporate.

• [6] On 29 January 2025 I made the following interim orders:
  1. Pending the making of final orders the body corporate is not to continue any legal proceedings against the applicant to recover "losses" allegedly incurred by the body corporate including:
     1. $5,364.70 - Legal expenses relating to an alleged failure to return body corporate property.
     2. $5,296.50 - Costs of replacement ancillary CCTV equipment
     3. $2,416.11 - Costs of replacing various locks
  2. Pending the making of final orders the body corporate is to apply levy contributions received from the applicant toward administrative and sinking fund levies and not for other purposes.
  3. I declare that as at 1 November 2024 the applicant did not owe any outstanding contributions to the body corporate.

• [7] The applicant says the body corporate committee has purportedly commenced legal proceedings against him to recover losses allegedly incurred by the body corporate. The alleged losses total $13,077.20 and allegedly comprise:
  1. $5,364.70 - Legal expenses relating to an alleged failure to return body corporate property.
  2. $5,296.50 - Costs of replacement ancillary CCTV equipment
     1. $2,416.11 - Costs of replacing various locks
• [8] These are detailed in a letter of demand dated 02 September 2024 from CJM Lawyers, who act for the body corporate.[1]
• [9] The body corporate has charged the following to his body corporate account:

29 August 2024: $5,364.70 as "Legal Expenses - Other"

01 October 2024: $3,437.50 as "Security Equipment - Other"

01 October 2024: $1,235.00 as "Security Equipment - Other"

01 October 2024: $624.00 as "Purchased Assets - Other"

• [10] The applicant notes that there is no general meeting resolution as required by section 312 of the Act to commence a proceeding. The minutes of all duly constituted meetings held between 08 February 2024 and 09 October 2024 do not contain any resolution authorising legal proceedings against him.
• [11] I am satisfied that this matter falls within the legislative dispute resolution provisions.[2] An adjudicator may make an order to resolve a dispute in the context of a community title scheme between a lot owner and the body corporate about a claimed or anticipated contravention of the Act or the community management statement (CMS); or the exercise of rights or powers, or the performance of duties, under the Act or CMS.[3]
• [12] At the interim stage I gave the committee a brief opportunity to respond to the interim order application pursuant to section 271 of the Act. However I noted that the subject dispute would require a significant amount of investigation and deliberation on my part before I would be able to make final orders.

• [13] Pursuant to section 243 of the Act, I subsequently invited the body corporate and all lot owners to make submissions regarding the outcomes sought. Submissions from seven individual lot owners support the application and raise serious concerns regarding the governance of the scheme.
• [14] Submissions made on behalf of the body corporate committee included the following:
  • The Body Corporate has a statutory obligation to undertake reasonable financial management of the scheme in accordance with the legislation, including the recovery of Body Corporate debts (s.156(3) Accommodation Module, s.94(1)(c) Act.
  • The Respondent body corporate intends to initiate proceedings for the recovery of amounts owed to them in a Court of competent jurisdiction. To order that body corporate immediately cease all legal proceedings against applicant would be to oust the jurisdiction of the courts to deal with such matters and to unreasonably restrict the Body Corporate from recovering any monies owed.
  • In relation to the Applicant's request for outcome 3, the Respondent acknowledges that the former Body Corporate Manager, SSKB, incorrectly applied the Applicant's Contribution payment in the amount of $1,098.00 on or about 1 November 2024. Following the interim orders the new Body Corporate manager (MBCS) has since reapplied the Applicant's contribution payment in compliance with s.156(5)(b) Accommodation Module, and order 2 of the interim decision.
• [15] Submissions were received from seven individual lot owners who support the application and raise serious concerns regarding the governance of the scheme. Concerns raised by various lot owners are summarised below.
• [16] Some owners are of the view that the committee spends excessive body corporate funds on legal action without a clear justification, a clear abuse of power and disregard for the best interests of the body corporate.
• [17] They say the committee believes it can charge legal costs and any other alleged debts directly to individual lot owners and include these amounts on levy notices and aged balance statements of owners, as they wish. However expert legal advice they have obtained is that only a contribution or instalment of a contribution or a penalty for not paying a contribution or instalment of a contribution by the due date can be included in a levy notice to lot owners, as provided for in the legislation.
• [18] Unsubstantiated claims have been made against lot owners and former committee members in respect of alleged disposal of obsolete security monitoring equipment as well as legal expenses incurred by the committee. However owners say there are no orders by a Court or Tribunal requiring payment of such costs and legal expenses. Further, they are not aware of the commencement of any such proceedings.
• [19] A number of owners are concerned that the current committee can and will continue to add unauthorised charges to their accounts to prevent them from voting. They signalled their intention to do that at a Vote Outside Committee held on 08 January 2025.

• [20] Under section 227 (1) (b) of the BCCM Act, the definition of dispute includes a dispute between the owner of a lot included in the scheme and the body corporate for that scheme. Under section 228 (1) of the BCCM Act, disputes within the jurisdiction of an Adjudicator include contraventions of the BCCM Act and the exercise of powers, or the performance of duties, under the BCCM Act.
• [21] The applicant says the body corporate committee has purported to commence legal proceedings against him to recover losses allegedly incurred by the body corporate. The alleged losses total $13,077.20 and allegedly comprise:
  1. $5,364.70 - Legal expenses relating to an alleged failure to return body corporate property.
  2. $5,296.50 - Costs of replacement ancillary CCTV equipment
     1. $2,416.11 - Costs of replacing various locks
• [22] These are detailed in a letter of demand dated 02 September 2024 from CJM Lawyers, who act for the body corporate.[4]
• [23] The body corporate has charged the following to his account with the body corporate:

29 August 2024: $5,364.70 as "Legal Expenses - Other"

01 October 2024: $3,437.50 as "Security Equipment - Other"

01 October 2024: $1,235.00 as "Security Equipment - Other"

01 October 2024: $624.00 as "Purchased Assets - Other"

• [24] The applicant seeks an order that the body corporate remove the above charges from his body corporate account. He notes that there is no general meeting resolution as required by section 312 of the Act to commence a proceeding, or even a committee resolution purporting to authorise this action. The minutes of all duly constituted meetings held between 08 February 2024 and 09 October 2024 do not contain any resolution authorising legal proceedings against him.
• [25] He believes that the Secretary, Marilyn Biggs (Tenant of the Caretaker) and the Caretaker, Chien-Hao Steven Lin, who were authorised by the committee to liaise with CJM Lawyers at a Vote Outside Committee held on 16 August 2024, have exceeded their authority to act on behalf of the body corporate by unlawfully instructing CJM Lawyers to commence proceedings against him. These legal proceedings have been commenced without the necessary approval from lot owners at a general meeting, as required by Section 312(b) of the Body Corporate and Community Management Act 1997.
• [26] The secretary, Marilyn Biggs, and chairperson, Tom Chen, signed a Costs Disclosure and Costs Agreement totalling $52,020.00 with CJM Lawyers on 18 August 2024 without proper authorization in breach of section 312(b) of the BCCM Act. This Costs Disclosure and Costs Agreement includes commencing proceedings in the Magistrates Courts (Stage 2) and to prepare for and attend trial (Stage 4) in clear breach of section 312(b) of the Act.
• [27] The applicant notes that this cannot be defended as an oversight because the committee unsuccessfully sought owners approval at the AGM on 9 October 2024 by motions 9, 10 and 11 to commence these legal proceedings. It is therefore evident that the committee were aware of section 312(b) and that a Special Resolution is required to initiate legal proceedings.
• [28] He believes that signing this Costs Disclosure and Costs Agreement is also a breach of section 162 of the BCCM Act because it exceeds the committee's maximum spending limit. At $52,020.00, the Costs Agreement is more than double the committee's spending limit. This cannot be defended as an oversight because the committee sought owners approval at the AGM on 9 October 2024 to increase the committee spending limit from $20,000 to $50,000. This indicates they were aware of section 162 of the Act and that they knew they were exceeding the maximum spending limit for the committee when they signed the Costs Agreement.
• [29] It is evident that the last AGM on 09 October 2024, the following motions were considered and lost:

9. Commence Legal Proceeding Against Previous Committee Members to Recover Unauthorised Expenditures - Motion by Special Resolution - LOST

10. Commence Legal Proceeding Against Previous Committee Members to Recover Body Corporate Assets - Motion by Special Resolution - LOST

1. Commence Legal Proceedings Against Body Corporate Service SSKB to Subpoena Full Body Corporate Service SSKB to Subpoena Full Body Corporate Records - Motion by Special Resolution - LOST

• [30] I also note that on 16 August 2024, the current committee purportedly resolved to:
  1. commence legal proceedings against previous committee members to recover losses suffered by the body corporate due to the previous committee's unauthorised expenditure (Motion 1);
  2. commence legal proceedings against previous committee members to recover losses suffered by the body corporate due to the previous committee's failure to return body corporate assets (Motion 2); and
  3. commence legal proceedings against the body corporate manager, SSKB to subpoena full body corporate records (Motion 3).
• [31] Those Committee resolutions purporting to authorize legal proceedings, were previously the subject of an adjudication application[5] by another lot owner who argued that the purported committee motions were invalid. In an interim decision dated 16 October 2024, an Adjudicator made the following order:

Pending final determination of this application, the body corporate must not implement the motions passed outside of committee meeting dated 16 August 2024 to commence legal proceedings against former committee members and the body corporate manager, SSKB.

• [32] The Dictionary located at Schedule 1 of the Accommodation Regulation Module provides that

Body corporate debt means the following amount owed by a lot owner to the body corporate-

(a) a contribution or instalment of a contribution;

(b) a penalty for not paying a contribution or instalment of a contribution by the date for payment;

(c) another amount associated with the ownership of a lot.

• an annual payment for parking under an exclusive use by-law

• an amount owing to the body corporate for lawn mowing services arranged by the body corporate

• [33] The amount claimed by the body corporate against the applicant, are not contribution levies owed by the owner of lot 45, but miscellaneous items which have been unilaterally charged to his account. I have therefore ordered that the body corporate is to remove the following charges from the body corporate account of Mr Daniel Levick owner of Lot 45:

29 August 2024: $5,364.70 as "Legal Expenses - Other"

01 October 2024: $3,437.50 as "Security Equipment - Other"

01 October 2024: $1,235.00 as "Security Equipment - Other"

01 October 2024: $624.00 as "Purchased Assets - Other"

• [34] While I am of the view that the purported committee motions listed above were invalid, I note that the applicant is also seeking a prohibitory order that is broad enough to prevent the body corporate from taking any pre-litigation steps and commencement of new proceedings against the applicant.
• [35] I am unable to impose a blanket prohibition on bringing further proceedings. While there may be concerns that future proceedings may not be brought in good faith, I am unable to impose a blanket prohibition on bringing further proceedings. However I remind the respondent that any future legal proceedings should be authorised by a valid special resolution in accordance with 312 of the Act, unless the proceeding is a "prescribed proceeding".
• [36] The third final outcome sought by the applicant is that the body corporate apply the payment of $1,098.20, made by him on 01 November 2024, against the body corporate levies for the Administration Fund, Sinking Fund and Insurance.
• [37] However I am advised by the respondent that following the making of interim orders, the new Body Corporate manager (MBCS) has since reapplied the Applicant's contribution payment in compliance with s.156(5)(b) Accommodation Module, and order 2 of the interim decision. Consequently this outcome is no longer required.

[1] Attachment 15 - Letter Chia Wei Wu CJM Lawyers to D Levick

[4] Attachment 15 - Letter Chia Wei Wu CJM Lawyers to D Levick

[5] Flinders Village [2024] QBCCMCmr 374 (Application 0870-2024)