Zenith [2025] QBCCMCmr 200 | Case summary

Zenith [2025] QBCCMCmr 200 | Case summary | Zoe

[10]

[13] The Jacksons submit that the total of $66,928.12 is incorrect. They say the project they believe the applicant is referring to, is in fact several different works that have taken place in the common property area, located on the ground floor. The main purpose of the upgrade to these areas was to improve facilities for owners and guests.
1. Indoor pool
2. Community shower complex
3. Male toilet complex
4. Female toilet complex
[14] The Jacksons say at no time was any work done to the sauna. The areas in items 2, 3, and 4 are located on the ground floor and are common property areas used in conjunction with areas next to the tennis court, large outdoor swimming pool complex, gymnasium, large outdoor BBQ and entertainment area. All these areas use items 2, 3 and 4 as they are the only toilet and shower facilities in the common property area on the ground floor.
[15] They dispute the applicant's assertion that the work constituted a project.
[16] They say the white commercial tiles purchased the previous financial year for $21,042 were used in items 1-4. The laying of tiles in these areas was paid for in 3 separate payments of $10,000, $6,481 and $14,795. Before the tiling could start, a plumber had to be engaged to remove shower screens, taps, shower roses, hand basins, toilets, mirrors and handrails.
[17] The Jacksons say all owners were notified prior to the commencement of the works and that it would take a few weeks to finish. When the work was finished, owners and guests voiced their approval to the committee in bringing areas 1-4 to a high standard. The areas were out of service whilst the works were taking place.
[18] When the plumber started removing the plumbing items and fixtures, they immediately contacted the committee and advised that all items could not be reused because some were cracked and/or broken. The plumber advised that these items were domestic grade and not suitable for commercial use and recommended that they be replaced with commercial grade items to comply with the building code.
[19] The committee approved the work because they could not wait, as the toilet and shower areas had to be back in service as soon as possible. If the committee did not make the quick decision, all adjoining outdoor amenities, outdoor pool area, tennis court, sauna, gymnasium and outdoor BBQ/entertainment complex could not be used. Without the use of these amenities, there would be considerable loss to guests and owners, not to mention the monetary loss to owners with rental units.
[20] The Jacksons say that at no time did any owner object to any of this work being done and all owners appreciated that the works were completed in the time frame suggested.
[21] The applicant replies that the motion for approval of $21,042 for commercial white tiles of 29 May 2023 and all other invoices referenced in his application for which there are no available expenditure motions are part of a 'project' as contemplated by section 172(2) of the Standard Module. He submits that no reasonable person, acting either as a body corporate committee member or strata manager, could consider that these tiles alone were not associated with any other expenditure. At a bare minimum, labour and other installation costs were necessitated or made likely by the purchase of the tiles and hence formed part of a project. Consequently, he says any number of permutations of the project expenses connected to the tile purchase exceeded the spending limits and hence required an ordinary resolution, supported by at least 2 quotes for each item. That did not occur. The submission by the Jacksons that the works consisted of 4 separate sub-projects is artificially arbitrary and devoid of any numerical rationale or explanation, being precisely the conduct section 172(2) intended to prevent.
[22] He further replies to the Jacksons' submission that their denial of any sauna expenses in the relevant period is demonstrably wrong. The extract (provided with his reply) from the Building Status Report for the period 1 March 2024 to 31 March 2024 shows that Jemstar Electrical Services installed a sauna on 29 February 2024 at a cost of $2,734.38. The costs of the sauna heater itself are unknown based on the information available to the applicant.
[23] Further, the applicant says the email from the former caretakers to owners dated 20 March 2024 titled 'ZENITH ONSITE MANAGER NEWS' discussed the project as follows, consistent with it being a single project:

[12]

[24] Sections 172 - 174 of the Standard Module provide for spending by a body corporate. The detailed provisions regarding financial management make it clear that any person engaging in spending on behalf of the body corporate should be able to point to a resolution authorising the spending. A resolution that only indirectly authorises the spending is sufficient, for example, a resolution properly authorising entry into an agreement will indirectly authorise payments made pursuant to that agreement.
[25] Under section 172, a committee is generally prohibited from authorising spending above the committee spending limit unless it is specifically authorised by ordinary resolution at a general meeting. Also, if a series of proposals forms a single project, the cost of carrying out any one of the proposals is taken to be more than the committee spending limit if the project as a whole is more than the relevant limit.[2]
[26] The material before me suggests that what the former onsite managers describe in their email of 20 March 2024 to owners as 'indoor pool sauna spa upgrade' was in fact a single project that included at least new wall tiling, new toilets, vanities, shower screens and towel hooks and a new heater for the sauna.
[27] With a committee and major spending limit of $27,300[3], I agree with the applicant that the total expenditure on the indoor pool sauna spa upgrade recorded in the financial statements exceeded both the relevant limit for committee and major spending. As such, owners should have been given the opportunity to vote on the expenditure, with at least two quotes before them[4].
[28] However, except for a committee resolution made by vote outside of a committee meeting (VOC) purportedly authorising expenditure of $21,042 on tiles (discussed separately below), neither the applicant, nor the current committee, nor the former body corporate managers, nor the former committee members who made submissions, have provided any evidence of any resolutions (committee or general) to authorise the undertaking of the indoor pool sauna spa upgrade project or the expenditure on it. Nor does there appear to have been any specific provision made in the approved budgets for the expenditure.
[29] I agree with the applicant that the body corporate has not validly authorised the expenditure related to the indoor pool sauna spa upgrade project (in a presently unknown sum not less than $66,928.12).
[30] I will make a declaration that the body corporate has not validly authorised the indoor pool sauna spa upgrade project or the expenditure of body corporate funds on it.

[13]

[31] The applicant says the financial statement for the period 1 April 2023 to 31 March 2024 records expenditure from the administration fund of $21,902.42 and, for the period 1 April 2024 to 22 August 2024, $29,316, on Legal Expenses.
[32] The body corporate evidently, says the applicant, received legal advice and services for a range of matters during the specified periods. That included a large retainer regarding the body corporate's dispute with the since departed building manager involving the issuance of lengthy legal advice[5] and demands for rent over the unincorporated lot 1[6].
[33] The applicant says there are no resolutions validating any of that expenditure.
[34] The most recent financial statement for the period 1 April 2024 to 31 December 2024 records legal expenses of $58,673.50, against a budget of $25,000. Since the applicant started raising concerns, the body corporate has passed some VOCs to purportedly validate the appointment of lawyers. However, the applicant says those motions are inadequate in that they are too general in nature and do not account numerically for the fees incurred.
[35] The applicant provided a record of motions by VOC dated 9 September 2024 which record the body corporate purportedly authorising the appointment of Mahoneys to act, and provide legal advice, on the submitted adjudication application in relation to the proposed General Meeting, and any other matters relating to the Applicant, in accordance with the proposal provided by Mahoneys and ratifying the appointment of Mellick Strata Law to act and provide legal advice on the matter of the new Management Agreement, and on Owner Motions received for the upcoming Extraordinary General Meeting, in accordance with the proposal provided by Mellick Strata Law.
[36] The applicant submits that these matters need investigation (hence his request for a comprehensive audit - discussed below).
[37] The Jacksons submit that:
1. Matthews Hunt Legal were engaged to remove the then building managers, Kevin and Karen Porter. The committee was advised to engage solicitors. This was voted on and approved by the committee. The building managers also engaged solicitors.
2. Mellick Strata Law were engaged to prepare the new building management agreement. This was approved by the committee.
3. When the applicant started corresponding with the chairperson, then SSKB[7], SSKB advised the committee to engage a solicitor - Mahoneys, as SSKB stated they were out of their depth.
4. There is no proof of where or how the committee members have personally benefitted financially. All the committee has done is approve invoices that were submitted to the body corporate for payment for work done at Zenith.
5. The only involvement the committee has in paying an invoice is when an invoice is presented to the committee for approval for payment. All invoices are uploaded to the accounting hub run by SSKB. SSKB download the invoices that require payment and send them to the building manager. The invoice is printed off, reviewed and approved by the building manager. Following approval by the building manager, the invoice is then passed on to a committee member to be approved for payment. Once the invoice is approved by both the building manager and the committee, it is then returned to the body corporate manager to be paid on the due date. This process has been in place for 16 years and never once been questioned.
6. The committee has no access to any of the bank accounts or monies of the body corporate. They are all controlled by the body corporate managers.
7. SSKB should have advised the committee when the spending limit on legal expenses was nearing the committee's level of approval. They never did this. SSKB are industry professionals, whereas all present committee members are volunteer lay people.
8. The legal fees that have been incurred are a direct result of the applicant's own actions. The voluminous issues and manner in which he raises them forced the committee to engage Mahoneys to deal with the applicant.
[38] Ms Thompson of Vision Strata submits that at the time of handover from Vision Strata to SSKB, the following costs were incurred under 'Legal and Dispute', during their engagement:
- Broadbeach law group $1,523.15 dated 13 November 2023
- Mathews Hunt Legal $2,511.82 dated 11 May 2023
- Mathews Hunt Legal $945.50 dated 11 May 2025[8]
- Mathews Hunt Legal $855,00 dated 17 January 2024
[39] Ms Thompson says any other payments to solicitors occurred after their engagement and while the body corporate was with SSKB. As such, they only comment on the above.
[40] In the committee meeting of 18 December 2023, under decisions made by VOC, is the resolution approving the engagement of Broadbeach Law Group. At the same meeting, Mathews Hunt Legal were engaged to review clause 15 of the caretaking and letting agreement, pursuant to a costs agreement. Minutes of this meeting were provided with Ms Thompson's submission.
[41] The only authorisation I have evidence of is that recorded in the minutes of the committee meeting of 18 December 2023, engaging Broadbeach Law Group and Mathews Hunt Legal, and the record of motions voted on by VOC dated 9 September 2024 purportedly authorising the engagement of Mahoneys and ratifying the appointment of Mellick Strata Law. None of those resolutions authorise or ratify the expenditure of body corporate funds in excess of the provision made in the approved administrative fund budget for such expenditure. If an expense arises for which inadequate provision has been made in the budget, the body corporate must, by ordinary resolution, fix a special contribution to be levied on owners.[9] There is no evidence of that having occurred here.
[42] Further, the submission from the Jacksons that invoices are approved by the building manager and one committee member is contrary to the legislation. To the extent that proposed spending is within the committee spending limit, all expenditure must be approved by a resolution of the entire committee. The building manager and one committee member do not have the decision-making authority of the entire committee.
[43] I agree with the applicant that the body corporate has not validly authorised its expenditure on legal fees from 1 April 2024.
[44] I will make a declaration that the body corporate has not validly authorised its expenditure on legal fees paid to Mellick Strata Law or Mahoneys from 1 April 2024.

[21]

[50] The applicant submits there is good reason to waive non-compliance with the time limit:
1. The applicant has no record of ever having received the motion, which the body corporate was required to provide within 21 days after the meeting[12].
2. The applicant does not know if the motion was uploaded onto an online portal by Vision Strata in 2023 or at all. If it was, he was not alerted to it and did not have any reason to look for it.
3. The applicant only became aware of the motion after:
  1. The body corporate ceased its retainer with Vision Strata and entered into a new body corporate management agreement with SSKB in around February 2024;
  2. SSKB published, on the StrataMax portal, financial statements for the periods 1/4/23 to 31/3/24 and 1/4/24 to 22/8/24, which showed over budget expenditure;
  3. The applicant reviewed those statements around the time they were made available in August 2024 and started making enquiries which included viewing the physical pool project works and downloading the motion from the portal;
  4. It then became apparent to the applicant that there was a lack of formal ratification for other, unspecified, pool project expenses;
  5. This concern led him to request body corporate records by email of 23 August 2024. The lack of substantive response led to his letter of 3 September 2024;
  6. Later in September 2024, he obtained the other pool project quotes/invoices (referred to above) from alternative sources which confirmed and raised the level of his concerns.
4. Until the financial statements were made available to him, he did not know and no owner acting reasonably would be expected to have known, the material facts giving rise to this application, including:
  1. That the motion existed;
  2. That the motion was in relation to a project that did not commence physically until 2024 and which exceeded the spending limits discussed above
  3. That the 2 quote rule had not been followed;
  4. That there were tens of thousands of dollars of other pool project expenses incurred for which no ratification had occurred.
5. The applicant does not ordinarily live on site and was not monitoring the building repairs to the indoor pool and sauna area.
6. The body corporate's own legislative recording keeping and notification failures, which caused the delay in this application, should not be a basis for it to avoid accountability.
[51] Although the applicant says he only became aware of the motion around August 2024, the minutes of the committee meeting of 20 July 2023, which record the resolution made by VOC on 29 May 2023, state that a copy was given to each owner on 2/08/2023. This was still within 3 months of the date the resolution was purportedly made and well before August 2024.

[28]

[58] The applicant says the relevant limit for committee spending was $18,200 (91 lots x $200)[13]. Given the expense exceeded that amount, (whether it was classified as maintenance or an improvement) it required authorisation by ordinary resolution of the body corporate in general meeting[14], which never occurred.
[59] The applicant says further that, because the expense exceeded the relevant limit for major spending, 2 quotes were required to be presented to owners.[15]
[60] The motion purportedly ratifying the expenditure on the tiles dated 29 May 2023 does not state whether it was voted on at a meeting or by VOC. The applicant says this peculiarity raises questions as to whether that motion is also invalid due to a failure to comply with committee meeting notice requirements. If it was a VOC, it is unclear on what basis it was considered so urgent, noting the pool project work did not commence for months thereafter.
[61] The applicant says owners do not know:
1. Why the body corporate or its agent considered it necessary to import tiles from Shenzhen, China, rather than simply purchase them domestically;
2. How and why this particular supplier was chosen;
3. Whether owners got value for money given the lack of a competitive quoting process;
4. Who it was that took delivery of the tiles at the port of Brisbane, stored them somewhere for many weeks, and transported them to Zenith.
[62] Nor do the body corporate records, or lack thereof, inform owners of the total project costs.
[63] Karen Thompson of Vision Strata submits that the relevant limit for committee spending was increased to $27,300 at the AGM on 29 June 2020, by motion 8. A copy of the minutes of this meeting were provided with her submission. The resolution stated 'That the committee spending limit and major spending limit be $300 per lot'.
[64] Ms Thompson says the resolution for the purchase of tiles was made on 29 May 2023, for $21,042, which was under the committee spending limit. The decision was made by VOC and voted on by all 7 members of the committee. This VOC was confirmed at the next committee meeting, held on 20 July 2023, under item '4. DECISIONS OUTSIDE MEETING'. A copy of the minutes of this committee meeting were provided with the submission. I note the following notation at the bottom of page 3 of those minutes:

[33]

[67] Ms Thompson directed Mr Duce to the chairperson, as they had no further information on this matter. A copy of that correspondence was also included with the submission.
[68] Vision Strata was not privy to any internal communications between committee members regarding this matter, apart from receiving the returned votes, all of which were in favour.
[69] Ms Thompson says the applicant's concerns about the decision to import tiles from Shenzhen, China, rather than sourcing them domestically, was a matter for individual committee members to consider. Or at the very least, request a second quotation even though the amount was less than the relevant limit for major spending. It would have been good governance to do so. Whilst Ms Thompson had personal concerns regarding this matter, she says the committee voted in favour of the expenditure.
[70] While their office may have had concerns about the intended purpose of these tiles, the expenditure was within the committee's spending limit, the purpose of the purchase was advised as being for future use for the body corporate common areas. As such, the committee followed the appropriate process in voting outside a committee meeting, with that decision being confirmed at its next meeting.
[71] Ms Thompson cannot comment on any other expenditure for the indoor pool area as all other expenditure occurred after their engagement ended.
[72] The applicant replies that he was not previously aware of the motion increasing the committee and major spending limit, which is to this day, not on the online portal. I note that in his email of 23 August 2024 requesting body corporate records to the then secretary, Maxene Jackson and SSKB, he specifically asked for Any motions voted on, whether carried or defeated, to increase the "relevant limit for committee spending" or the "relevant limit for major spending" (noting the definition of those terms in Schedule 1 of the BODY CORPORATE AND COMMUNITY MANAGEMENT (STANDARD MODULE) REGULATION 2020.
[73] The applicant submits a quote from The Tile Collective dated 19 March 2024 for $3,240.80, which was provided to him by a member of the current committee. The applicant says the quote was based on the same tile laid at Zenith, for a quantity determined by a measurement of the area where the tiles were laid.
[74] The applicant says, even accounting for the (unreasonably incurred) international import costs such as customs and excise, the delta between this quote and the $21,042 actually incurred is too large to be dismissed as an organic variable in supplier pricing/timing. The applicant submits that the appropriate inference is that the order for $21,042 was for a much larger quantity of tiles than what was needed and used at Zenith.
[75] Richard Duce, in his email of 26 May 2023 to Karen Thompson, was absolutely right to question the quantity of tiles in the invoice, says the applicant. The response he got, if any, is unclear. Mr Duce sold out of the scheme on 23 September 2023.
[76] The applicant says the Jacksons do not attempt to answer any of the questions posed by him in para [61].
[77] The former caretaker informed the applicant that Mr Jackson had the tiles taken from the Brisbane docks to be stored in his garage where he was at the time building his new house at Gatton, west of Brisbane, not far from what appears to be one of the Jackson family businesses, Rockwell Quarries.
[78] The applicant says there is also contemporaneous evidence confirming that Mr Jackson was in possession of tiles intended for purposes unrelated to Zenith between the dates of purchase and the project works at Zenith in the form of a publicly sourced Facebook post uploaded during the period of the imported tiles' storage.
[79] Even if the committee authorised the payment of this invoice in technical compliance with the legislation, questions arise about its reasonableness[16] in doing so in the particular circumstances of this case, which include that there is no record of any body corporate authorisation for any work for which the tiles might be used.
[80] The applicant rightly questions the validity of the committee resolution of 29 May 2023. I am satisfied that the committee did not act reasonably in approving payment of the invoice for the tiles in circumstances where the body corporate had not authorised any work for which the tiles might be used. Accordingly, I consider the committee resolution purportedly made on 29 May 2023 was at all times void. I will make an order to this effect.

[36]

[82] Case law suggests the requirements for an effective ratification are:[19]
1. the agent (ie the person or entity whose act is being ratified) must have purported to act for the principal (ie the body corporate or committee)
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.
[83] The fact that there may have been no urgency in the expenditure approved by the committee or a committee member does not prevent the body corporate resolving to ratify it. That the committee may have exceeded its spending limit does not alter the capacity of the body corporate to decide to ratify that conduct. The fact that the expenditure exceeded the approved budget also does not invalidate a decision to ratify the expenditure.
[84] Section 101A of the Act specifically provides that a committee member is not civilly liable for an act done or an omission made in good faith and without negligence in performing the person's role as a committee member. I note the submission of Rachael Lang, former committee member, saying that the committee are all lay people with jobs. Being owners and some living on site, have always put Zenith first on all of their decisions. When they were unaware of what to do they sought advice from the strata managers at the time and solicitors if needed. At no time did they think they were doing the wrong thing or thought to get a second option as they were getting professional advice. The full control of the bank accounts was always with the strata manager.
[85] The onus would be on a person alleging liability to substantiate the existence of negligence and bad faith. That means that generally a committee member will not be personally liable for a decision they make or participate in, even if it was not valid.
[86] If the committee or a committee member authorised expenditure without a valid resolution, the applicant does not demonstrate (although I acknowledge genuine questions are raised in relation to the tile purchase) that the indoor pool sauna spa upgrade project is not properly a body corporate expense despite that. When the body corporate has benefitted from the project, I do not consider it would be just or equitable to transfer the cost of it to one or more individuals, even if there was some irregularity in the way the expenditure was approved.
[87] It appears from a letter from Mahoney's to the applicant dated 16 October 2024[20] that:

Zenith [2025] QBCCMCmr 200 (11 June 2025)

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