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

ADMINISTRATOR - whether the body corporate is meeting its maintenance obligations - whether an administrator should be appointed.

Act, ss 94, 270, 278, 301; Accommodation Module, s 170

• [1] This application is about the maintenance of the scheme. The applicant asserts the body corporate is not ensuring the common property is maintained in good condition.
• [2] The body corporate has a maintenance agreement (the agreement) with Peterson Management Services Pty Ltd (Peterson, the contractor). Under the agreement, the contactor must undertake a range of duties primarily related to cleaning, and the body corporate must arrange independent contractors for specialist works. Peterson is also appointed to provide services under separate caretaking, letting and security agreements.
• [3] The applicant says this dispute is about the failure of the body corporate to define and meet its legislative obligation to maintain the common property in good condition. He says compliance with that obligation is complex, involving cleaning and maintenance services, some of which are provided by or supervised by the contractor. He says there is significant doubt that the system of contracts and approvals achieve an outcome that can be described as 'good condition'. The applicant says this is a long term a problem and owner funds are being wasted.
• [4] The applicant says he wants to address how the body corporate can fulfil its obligation to define and supervise a schedule of duties to ensure the required outcome that the common property is in good condition. As the applicant believes the committee has failed to fulfil its obligations, he wants an independent administrator appointed. He seeks orders that his nominated administrator be engaged to undertake several tasks to ensure the body corporate complies with its statutory maintenance obligations.
• [5] The issues then are whether the applicant has established that the applicant is not meeting its maintenance obligations and, if so, whether administrator appointment is warranted.

• [6] The Rocks Resort community titles scheme 9435 (The Rocks Resort) is a 124-lot scheme at Currumbin. The community management statement (CMS) shows the Accommodation Module applies. The scheme is registered as building unit plan 5771.
• [7] This application seeks the following orders:

- The adjudicator appoints Mr Mike Murray from Strata Value Consultancy as Administrator to ensure the body corporate obligation to comply with section 170 of the Accommodation Module to maintain common property in "good condition" is completed. A suitably skilled independent administrator can be appointed as per Section 301 and Section 23 of Schedule 5 of the BCCM Act, as the s170 requirement is not reliably defined or fulfilled to protect the interests of all owners.

- The administrator is authorised to exercise the power of the body corporate,

1. To obtain suitable legal advice against all applicable Australian law, to aid the status review and negotiation of the existing maintenance contract (including cancellation),
2. to employ an independent registered professional quantity surveyor to review the current state of common property, compile a duties list that could include unskilled and other specialist tasks requiring skilled labour and equipment, that ensure an outcome that will be compliant with the BCCM Act S170, prepare a comparison (including remuneration costs) with the existing contract duties both listed and performed, and
3. to negotiate with the management rights holder to agree appropriate duties schedules and remuneration for the Maintenance contract, and/or cancel the contract, and
4. to issue an open market tender for the required and/or additional cleaning services to determine market costs, and
5. to perform a tender review and award commercial contracts for the cleaning requirements as per the requirements for S150 Quotes for major spending of the Accommodation Module, and
6. to inform all owners of the progress and outcomes, at regular intervals.

- The adjudicator issues any additional "reasonable" orders that ensures the Rocks Resort Body Corporate can demonstrate compliance with section 170 of the Accommodation Module to maintain common property in "good condition".

• [8] 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.[1] I am satisfied I have jurisdiction to determine this matter under the dispute resolution provisions.[2]
• [9] I note that a dispute about a claimed or anticipated 'contractual matter' about the engagement of a person as a caretaking services contractor or their authorisation as letting agent (including a dispute about the performance of duties under the terms or the engagement or authorisation) is a 'complex dispute' for the purpose of the Act.[3] A complex dispute is not within the jurisdiction of a department adjudicator.[4]
• [10] The applicant says the management rights holder (Peterson) may not have been informed that their services do not meet their contractual obligations. He says the body corporate has not issued remedial action notices since 2010. He also says elements of the code of conduct for caretaking service contractors have been ignored.[5] Despite those assertions, the applicant says this is not a dispute with the management rights holder.
• [11] I note the body corporate previously took action against Peterson and was unsuccessful.[6] The applicant's views on the previous process and decision are not matters for me to decide.

• [12] This application was lodged on 6 December 2024. The Commissioner's delegate sought clarification from the applicant on some aspects of the application,[7] which was then amended.[8]
• [13] The Commissioner invited submissions from the committee and all owners.[9] Some 48 submissions were received. The applicant obtained and responded to the submissions.[10]
• [14] The application was referred to department adjudication.[11] I have now investigated the dispute, including reviewing the application and submissions.[12]

• [15] The committee says it has worked to restore the body corporate's finances and invest in capital and maintenance programs to ensure the longevity of the aging beachside structure, facilities and grounds, and introduce energy and cost reduction initiatives. It notes matters raised in other submissions. It says 64 owners formally asked the applicant to withdraw his application and engage in discussions with the committee and Peterson to present his concerns. It seeks dismissal of the application. It says the applicant has made false and misleading statements, which is an offence. It requests penalties against the application for those statements.
• [16] A representative of Peterson says the applicant has a history of not accepting the umpire's decision and causing problems. They say it has been a major investor in The Rocks Resort for 25 years, maintaining the value and presentation of the property. They express pride in the standard of the 41-year-old building and its facilities, gardens and grounds.
• [17] Some 40 submissions from owners and committee members oppose the application, most in vehement terms. Comments in the submissions include:
  1. The application includes incorrect and unsubstantiated statements.
  2. There is no ongoing dispute. The applicant has a history of unsuccessful complaints, including attempts to remove the building managers, which incurred significant and unnecessary costs for the body corporate. The applicant has a grudge against the building manager. They object to the ongoing actions of the applicant.
  3. The applicant does not represent their interests. His supporters are a small minority.
  4. The applicant's motions have been overwhelmingly defeated. The applicant should accept the results of voting on his motions and the views of the majority.
  5. They are happy with the maintenance of the scheme. It is well presented and continually improved. The condition of the building and facilities is better than good and exceeds most. The gardens are beautiful. Property values have increased. One says an inspection of the scheme would easily demonstrate the applicant's claims are false.
  6. The applicant provides no evidence of the common property not being in good condition or of requests on maintenance issues.
  7. Some comment on the body corporate's expenditure and actions on maintenance.
  8. There is strong support for the committee and its efforts. The committee has worked with the building manager to resolve previous issues and has been re-elected.
  9. There is strong support for Peterson.
  10. One says the hours spent to maintain the scheme claimed by applicant are grossly inaccurate and easily disproven. Another says claims that excessive costs have been paid to Peterson are false and cannot be substantiated.
  11. One says the applicant does not appear to understand the duties in the agreements or the need for additional expenditure to keep the building maintained. They refer to the last two reviews of the management agreements.
  12. One questions the link between the payment to Peterson and the statutory maintenance obligation were there is no such consideration in the legislation.
  13. The application is vexatious and a waste of time. They object to the cost.
  14. The applicant is trying to divide owners and further his own agenda. He is trying to gain control of the body corporate without being elected to the committee.
  15. An administrator is unnecessary and a waste of money. They do not want someone overriding the democratically elected committee. One says it would reopen division. Another queries how an administrator could be considered when Peterson has legally binding contracts, there is an elected committee, and the finances are audited.
  16. The nominated administrator has a close relationship with the applicant. They are not independent and there is a conflict of interest.
  17. Several submissions seek sanctions against the applicant for the abuse of the dispute resolution process and want him to pay costs.
• [18] Six owner submissions indicate support for the application. In particular:
  1. One owner provides a copy of a body corporate submission to tribunal proceedings in 2014. Submitter says the submission highlights that historically the body corporate and managers did not share a common understanding of what was required to maintain common property in good condition. They say it demonstrated the discrepancy between the expert opinions on how many hours are required to maintain common property at a good standard and the actual hours that can be substantiated.
  2. Another does not consider the contractor is carrying out the correct duties. They comment on the activities of Peterson's employees and a previous dispute. They support a negotiated outcome, with a skilled administrator investigating if the committee has met their legislated maintenance requirements.
  3. A further owner says the building is not up to the expected cleanliness standard despite the large cleaning fees and the committee does not understand what it should do.
  4. One submission discusses balancing the cost of maintenance and cleaning with quality to maintain a high standard and the building's future. They say long term contracts can provide stability and consistency, but risk complacency. They refer to a lack of clarity about standards, and the lack of transparency which can erode trust. They say other contracts can divert resources from maintenance. They discuss ideas for negotiation. They support an independent person looking at how the building is performing against industry standards, more transparency about costs and duties, and more trust and communication between the parties.
  5. Another owner says the agreement does not provide for an independent review of the duties. They believe the committee should obtain legal advice on whether the contract could be reviewed. They say minutes do not show how the committee assures the duties have been performed to acceptable standards and there was no meaningful response to a submission that hours worked are significantly less than those estimated.
• [19] In response, the applicant says the dispute resolution process should focus on the requirements of the Act and not be a poll of owners or a 'beauty contest' for the parties. He refers to various statutory obligations. He refers to the large number of owners submissions as a coordinated campaign where many miss the point. He comments on the reasons or motivations for owners voting on the new management rights contract and against his motions.
• [20] The applicant says that while many submitters say the scheme looks good, the legal issue is whether working 40 hours and getting paid for 105 hours gives any confidence that the scheme complies with the legislation. He asserts that an occupier who did not make a submission confirmed the applicant's observations of the number of hours worked. The applicant refers to a previous body corporate submission to the tribunal and says there is no evidence that the situation has changed. He says committee submissions do not comment on management reviews or outcomes or any standards applied to maintaining the common property.
• [21] The applicant says the concerns about the nominated administrator are misplaced. He says he approached other firms who declined the assignment, and he did not consider the current body corporate manager had the required skills or knowledge. He says the nominee declares his association with the applicant. He says there is no valid reason for concern.

• [22] It is evident that the applicant has concerns about the contents and management of the agreement with the contractor (along with other agreements with Peterson). He approaches that concern from the perspective of alleging the body corporate has failed to maintain common property in the way the duties in the agreement are defined and supervised. The applicant says he is not seeking to address individual defects or the failure of cleaning processes, but to resolve the 'systemic failure' of the body corporate to develop and supervise building services contracts and compliance with the caretaker's code of conduct. Ultimately, the applicant appears to seek a renegotiation or cancellation of the current agreement. He wants an administrator to pursue that process.
• [23] In determining this application, I will consider the body corporate's obligations and the basis for the order sought.

• [24] A body corporate must administer the common property and body corporate assets for the benefit of all owners in the scheme.[13] Specifically, the legislation imposes an obligation on a body corporate to maintain the common property in good condition and, to the extent that the common property is structure in nature, a structurally sound condition.[14]
• [25] The legislation does not define 'good condition' or 'structurally sound condition'. Accordingly, the meaning of those terms is to be determined according to the principles of statutory interpretation. That will include considering the meaning of the words having regard to the context and purpose of the legislation.
• [26] A body corporate could detail its expectations about maintenance standards in any contract it enters into. But any contractual terms or definitions could not alter the meaning of the terms in the legislation or the body corporate's statutory obligations.[15]
• [27] The legislation does not stipulate how the statutory maintenance obligations must be achieved, except to the extent that the body corporate must act reasonably.[16] The body corporate can engage contractors to assist it with its maintenance functions,[17] but it is not obliged to do so.

• [28] The applicant disputes the body corporate's compliance with its maintenance obligations. He questions whether the common property can be said to be in 'good condition', having regard to the number of hours spent on maintenance and the amount paid for that work. The applicant particularly claims Peterson performs 40 hours a week of cleaning duties with unskilled casual labour but is paid for 105 hours a week for skilled labour. The applicant questions whether that can meet the requirement to maintain the common property in good condition. He says the body corporate has failed to meet the obligation to maintain the common property because 'good condition' is not reasonably defined by the existing arrangements or there has been a failure to supervise the duties. He says this is affecting property values, increasing costs, and diminishing residential amenity.
• [29] There may be questions for owners and the body corporate about whether the duties paid for under the agreement are being delivered and whether they are receiving value for money. I make no comment on those matters as they are beyond the scope of the particular question raised by this application. It seems to me that the question of whether the body corporate is complying with its statutory maintenance obligations is one of results. It is a matter of output rather than input. Whether the common property is in 'good condition' is a factual matter to be demonstrated by evidence of the actual condition of the common property. It is not a question of how many hours of work or expenditure are considered necessary to achieve that.
• [30] Regardless of how many hours are spent on maintenance, or the expenditure incurred, or whether the common property might be in better condition if the contractor worked more hours, the applicant has not actually provided any evidence that the common property is currently not in good condition. He claims there have been multiple requests to address maintenance issues. But he provides only one email in March 2024 listing items to be attended to, with no evidence that those requests had foundation or were not resolved by the body corporate.
• [31] It appears from the submissions that some owners are dissatisfied with the standard of cleanliness and maintenance at the scheme, but many are very satisfied with it. Neither the submissions for nor against the application evidence the condition of the common property.
• [32] The applicant bears the onus of proof. Fundamentally, the applicant has not established that the common property is not in good condition. Accordingly, he has not established that the body corporate is failing to meet its maintenance obligations.
• [33] Furthermore, even if the question of whether compliance with the statutory maintenance obligations is to be determined by reference to the number of hours of maintenance work or any other inputs, the applicant has not substantiated the claims he makes in that regard. The claims appear to be based on the applicant's observations and assumptions, but without any substantiated evidence of that. I also note that the reference to a submission written more than 10 years ago citing an apparent affidavit from the principal of Peterson some time before that is not evidence of the hours currently being worked or duties currently undertaken.

• [34] The applicant seeks the appointment of an administrator to ensure the body corporate complies with its statutory maintenance obligations and to undertake certain tasks, purportedly exercising the powers of the body corporate in doing so.
• [35] The legislation empowers an adjudicator to appoint an administrator and authorise the administrator to perform obligations of the body corporate, its committee, or a member of its committee under the Act or the CMS.[18] An administrator appointed by an adjudicator has the powers given to the administrator under the order.[19]
• [36] In overturning the appointment of an administrator in a scheme where there was considerable long-term disagreement, the former Commercial and Consumer Tribunal noted that:[20]

Appointment of an administrator is within the power of an adjudicator (section 276(3) and Schedule 5 of the BCCM Act), no criteria are prescribed for doing so, but it is a significant step since it takes responsibility for the conduct of the affairs of the body corporate out of the hands of the committee and vests it in the administrator. An applicant must therefore demonstrate to the required standard that such a step is appropriate. Typically, without attempting to be exhaustive, there will be evidence that the body corporate is so dysfunctional that it cannot operate properly within the statutory framework that governs it, or that there is a well founded suspicion, on the part of an applicant for appointment of an administrator of financial malpractice within the body corporate, or that there is conduct that amounts to undue oppression in the conduct of its affairs. Without more, mere disagreements between the members, especially when the disputes are due to reasonably held differences of view and there are means available to resolve them by reference to external processes.

• [37] The legislation provides several avenues for owners to address concerns about the actions and decisions of committees and bodies corporate. Owners can submit motions to the committee,[21] or a general meeting.[22] With sufficient support, they can request a general meeting be called to consider proposed motions.[23] They can nominate for committee membership.[24] If internal steps are unsuccessful, owners can bring a dispute resolution application challenging actions and decisions.
• [38] In that context, an applicant must provide substantive evidence that the administration of the body corporate generally, or at least on a specific issue or in a specific area, has broken down irretrievably or is in significant disarray such that the body corporate is fundamentally breaching its obligations. An administrator would then displace the power of the committee and body corporate to make decisions and manage the scheme either generally or on a specific matter.

• [39] The applicant says he wants a negotiated outcome to a problem that he claims has cost owners at least $1.5 million in excessive contract payments over 12 years and $400,000 in legal fees. He says he wants a suitably qualified, independent 'negotiator' (the administrator) to meet the body corporate's obligations. He wants a process to define 'good condition'.
• [40] Even if the body corporate was not maintaining the common property in good condition (which is not established), the grounds to the application do not explain how the administrator and their proposed functions would actually have any prospect of improving the maintenance of the common property. An administrator, like the body corporate, could obtain legal advice and engage a quantity surveyor. An administrator, like the body corporate could seek to negotiate a variation to the current agreement with the contractor.
• [41] But where there are contractual arrangements in place, the applicant does not explain what capacity the body corporate, through an administrator or otherwise, would have to unilaterally cancel the current agreement or compel the contractor to vary the existing agreements. And if that could not be compelled, there would appear to be little utility in the body corporate in tendering for alternative maintenance services.
• [42] The applicant proposes broad and ill-defined functions for the administrator, with ostensibly unilateral decision-making including to incur costs, engage other professionals, conduct negotiations, and run tender processes. But there are no specific deliverables, and the proposed tasks are not clearly linked to any improvement in the condition of the common property. There is no proposed duration for the appointment and no identified means of determining when the administrators' tasks would be completed. The proposed appointment is akin to a blank cheque and would be entirely inappropriate.
• [43] Where there is no basis to appoint an administrator, it is not necessary to consider the applicant's nomination for that role. However, I would make the observation that it would not be appropriate to appoint an administrator who is clearly aligned to one party in a dispute and is strongly opposed by a significant number of owners. That would be unlikely to assist the body corporate in moving forward in a constructive manner. Moreover, the application does not evidence that his nominee has the particular qualifications or expertise that might be expected for the type of specific tasks the applicant proposes be undertaken.

• [44] Many of the submissions assert that the application includes incorrect, unsubstantiated, false, deceptive, or misleading statements. Some seek sanctions in that regard.
• [45] A person must not state anything to the commissioner or an adjudicator that the person knows is false or misleading in a material particular.[25] To do so is an offence attracting a penalty. However, adjudicators have no role in issuing penalties for offences under the Act. A complainant could pursue the matter in the Magistrates Court under the Justices Act 1886.
• [46] Although there is clear disagreement over the basis for the application and substantive issues, the submissions do not clearly detail specific statements that are asserted to be false and misleading or provided evidence that the applicant knew them to be false and misleading. Some may be incorrect but may simply be a differing opinion or perspective. On the submitted material, I have no basis to make any finding that the applicant's statements breach of the Act. Given my substantive findings and the limits on my role, it would not appropriate to investigate that further. However, any complainant can pursue such matters in the appropriate forum.

• [47] Some submitters assert the application is vexatious, unsubstantiated, or an abuse of process. Some want costs or sanctions against the applicant.
• [48] The Act provides a low-cost dispute resolution process. There is no inherent authority for an adjudicator to award costs,[26] and there is no such authority in the legislation. The only legislative capacity to award costs against an applicant is if adjudicator is satisfied the application is frivolous, vexatious, misconceived or without substance.[27] In that case, costs of up to $2,000 may be awarded to compensate a body corporate or affected person for loss arising from the application. In awarding costs, the adjudicator may consider previous applications made by the applicant.
• [49] I am satisfied this application was misconceived and without substance. Moreover, the grounds to the application are of a vexatious character.
• [50] Although the submitters did not identify specific losses incurred by the body corporate, I expect it would at least have incurred costs in distributing the application to all owners. However, on this occasion I will not exercise my discretion to award costs.
• [51] While the applicant's approach may have been frustrating for the committee and other owners, that does not inherently prevent him pursuing his views through motions and applications. And while the applicant has brought previous applications in this office, they were not wholly unsuccessful or dismissed as frivolous, vexatious, misconceived or without substance. But the applicant is on notice that future applications of this nature may expose him to a costs order.

• [52] I consider the premise of the application is misconceived and the fundamental basis for the order sought is wholly unsubstantiated. Where the applicant has not provided any cogent evidence that the common property is currently not in good condition, the applicant has not established the basis for an administrator to be appointed to undertake any functions to assist the body corporate to meet its statutory maintenance obligations.
• [53] It is a matter for the body corporate (through decisions of the committee or owners) whether it wishes to obtain legal or other professional advice, review its current maintenance arrangements, or try to renegotiate its current agreements. However, the applicant has failed to establish any legal basis for an order compelling that to occur.

[2] Sections 227, 228, 276 and schedule 5 of the Act

[3] Noting section 149B and the definitions in schedule 6 of the Act

[5] Noting section 118 and schedule 2 of the Act

[6] Peterson Management Services Pty Ltd v Body Corporate for The Rocks Resort [2015] QCAT 255

[14] Section 170 of the Accommodation Module

[17] Noting section 15 and chapter 3, part 2 of the Act

[18] See Item 23 of Schedule 5 to the Act

[19] See sections 278 and 301 of the Act

[20] Surace v Commisso [2009] QCCTBCCM 42, paragraph 44

[21] Section 50 of the Accommodation Module

[22] Section 76 of the Accommodation Module

[23] Section 74 of the Accommodation Module

[24] Section 18 of the Accommodation Module

[26] 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