NAVIGATING THE DISPUTE RESOLUTION PROCESS

Community living has its challenges because of the potential for conflict.

The proximity of residents to one another in community living and the fact that individuals with diverse backgrounds and views must, as a group, make major decisions, opens itself up to disagreements.

If a dispute cannot be resolved internally, the two official avenues for dispute resolution under the Body Corporate and Community Management Act 1997 (the BCCM Act) are conciliation and adjudication.

Our office also provides referees who can resolve disputes under the Building Units and Group Titles Act 1980 (BUGT Act), however, this article focuses on the disputes lodged under the BCCM Act.

If you require information about seeking an order of a referee please submit an enquiry online or read our webpage referee orders for body corporate disputes.

We understand that lodging a dispute application can be a daunting process. This article focuses on some key points to assist you in navigating the waters of dispute resolution as smoothly as possible.

Can we consider your dispute?

We deal with disputes relating to rights and obligations under the BCCM Act or a body corporate’s community management statement (CMS).

From the outset, you must bear in mind that our office can only consider disputes that fall within our jurisdiction. For example, while some debt disputes may be conciliated, disputes of this kind cannot progress to adjudication under the BCCM Act.

Additionally, if a dispute is defined as a ‘complex’ dispute under the BCCM Act, it cannot be dealt with in conciliation or adjudication within our office. Contractual matters involving an engagement or authorisation of a body corporate manager, service contractor or letting agent are classed as complex disputes.

Applications to adjust lot entitlements also fall within this category of dispute.

We recommend reading Practice Direction 24 and Practice Direction 25 for further guidance about debt disputes and complex disputes and the appropriate forum for resolving these disputes.

Who you can lodge a dispute against

Section 227 of the BCCM Act sets out the different combinations of parties that can have a ‘dispute’. Importantly, your application will be rejected if your dispute does not fall within one of the specified combinations.

In our experience, the most common mistakes are made by owners who attempt to lodge an application directly against their committee, caretaking service contractor or body corporate manager.

An owner cannot lodge an application against any of these parties.

If an owner wants to dispute a committee decision, the other party in the dispute would be the body corporate – not the committee. A decision of the committee is a decision of the body corporate under the BCCM Act.

If an owner wants to raise concerns about a body corporate manager or caretaking service contractor, they can ask their committee to issue a remedial action notice if contractual duties are not being performed or there has been a breach of the relevant code of conduct.

Mandatory self-resolution

Before wading any deeper into the waters of dispute resolution, you must attempt to resolve your dispute internally with whomever your dispute is against. If you ignore this step before lodging your application, it is likely to be rejected.

This self-resolution requirement is in keeping with the key legislative objective of self-management, which is essential to community living. In addition to being more efficient, there is a greater likelihood of better managing delicate relationships if a matter is resolved internally.

The benefits of preserving relationships within a body corporate cannot be stressed highly enough.

Conciliation

If your self-resolution efforts prove unsuccessful, conciliation is the more informal of the two dispute resolution processes.

Conciliators do not make decisions about the issues in dispute. Rather, conciliators play a more facilitative role by trying to help the parties reach a good faith agreement. As the name suggests, ‘good faith’ agreements are not binding on the parties.

If the parties cannot agree to resolve the issues through conciliation, or if a good faith agreement is ultimately ignored, adjudication may be the next step to gain a resolution.

It is important to note that conciliation is not a service that is offered to clients seeking dispute resolution under the BUGT Act.

Adjudication

Adjudication is a more formal process in which an adjudicator makes a binding order on the issues in dispute.

Many of our clients mistakenly assume that adjudication involves a hearing – this is not the case. These applications are normally determined ‘on the papers’ by an adjudicator after reviewing an application, submissions and replies to submissions.

Our adjudicators have broad powers of investigation which enable them to seek additional information from any party or other person, undertake site inspections or request copies of body corporate records.

To safeguard natural justice, these investigative powers do not extend to meeting or speaking with the parties individually.

The equivalent process for clients lodging an application to resolve a dispute under the BUGT Act is called an order of a referee.

Do I start with conciliation or adjudication?

In most instances, you cannot side-step conciliation and jump straight to adjudication, although there are some matters where conciliation is not suitable.

If you are lodging an application against your body corporate, it is helpful to ask yourself – can the committee make a decision to resolve this issue?

If the answer is yes, you will generally need to lodge a conciliation application. If the answer is no, it is more likely that you will need to lodge an adjudication application.

For instance, adjudication is normally the correct process for disputing a motion passed by the owners at a general meeting. This is because the body corporate representatives at a conciliation session are normally voting committee members.

As the legislation does not allow the committee to change or revoke motions passed at a general meeting, it follows that the committee would have no authority to do so in conciliation.

It may be different in smaller bodies corporate where all owners are on the committee, as there is arguably little practical distinction between a committee decision and a general meeting decision if the same people are voting. Conciliation may be the more appropriate starting point when disputing a general meeting decision in this situation.

You can read Practice Direction 9 about other matters that are not suitable for conciliation.

Clear outcomes sought

You must clearly identify the outcome you are seeking when you lodge an application. It is not enough to simply identify breaches of the legislation, as it is not within the jurisdiction of our office to impose penalties.

An outcome is a clear and concise statement of:

• if conciliation – the specific action you want the other party to take, or to cease, to resolve the dispute
• if adjudication – the specific action you want the adjudicator to order to resolve the dispute.

The outcome you are seeking must match the request you made to the other party in your application, in your attempt to have the issue resolved internally. You need to provide evidence that you attempted to resolve each outcome internally.

If you are seeking more than one outcome, you should separately number each outcome.

As a guide, we have provided some case examples of incorrect outcomes and how they can be improved.

Case example 1

Simon is an owner in a body corporate. At a recent committee meeting, his motion about maintaining the common property garden was considered. The committee voted against Simon’s motion.

After unsuccessful attempts to resolve the matter internally, Simon lodges a conciliation application against his body corporate with the following outcome listed:

• the common property is not being maintained in good condition.

This is simply a statement of the problem – it does not tell us what Simon wants as an outcome.

Simon could change this statement as follows to make it an outcome:

• I would like the body corporate to approve the work proposed to maintain the common property garden, as it is currently not in good condition.

Simon is now correctly asking for a specific action to be taken to resolve the dispute.

Case example 2

After a month of dreary weather, rain has consistently leaked through the roof and damaged the carpet and walls within Lucy’s lot. There has been an ongoing issue with a waterproofing membrane in the roof.

Lucy had the damage within her lot repaired at her own cost. However, Lucy believes that the body corporate should pay for the repairs, as the roof that caused the damage is common property.

As Lucy has already been to conciliation about this issue, she decides to escalate the matter to adjudication, seeking the following outcome in her application:

• there has been damage to the carpet and walls inside my lot because the body corporate has not maintained the roof.

Again, this is not an outcome – it is only a statement describing the problem.

To make this statement an outcome for an adjudication application, Lucy could change it as follows:

• an order requiring the body corporate to reimburse me a sum of $6,500 for repairs undertaken to fix the damage to the walls and carpet within my lot, caused by its failure to maintain the roof.

Lucy is now correctly setting out what order she wants the adjudicator to make to resolve the dispute.

Keep in mind, while apologies are nice to have, they usually don’t resolve the substantive issue. The legislation does not require people to give apologies or make acknowledgements about an alleged wrongdoing.

Grounds supporting outcomes 

If you are lodging an application, the onus is on you to summarise the history or background to the dispute and state why you are entitled to the outcome you are seeking. Naturally, the stronger the reasons are for lodging the application, the greater the likelihood of the dispute being resolved in your favour.

These reasons are normally referred to as ‘grounds’ in the application form.

If you are seeking multiple outcomes in your application, you should have separate grounds supporting each of these outcomes.

As vexing as a situation may be, you must still be able to demonstrate that there is some legal basis for the outcomes you want – namely, that the outcomes relate to a provision of the body corporate legislation or your scheme’s community management statement (CMS).

The legislation specifies that detailed grounds are provided in an adjudication application.

While you are required to provide grounds supporting your outcomes in a conciliation application, the same level of detail is generally not required.

Including supporting documentation

If you are relying on any supporting documentation or evidence for your dispute application, you should clearly identify and reference these in your summary containing the background of the dispute and your grounds. You may wish to include things such as meeting minutes, photographs, plans, sketches, reports from qualified persons or correspondence in your statement of grounds.

For clarity, these attachments should be numbered. We also strongly recommend you provide a schedule listing all attachments referenced in your statement of grounds.

While you must include relevant supporting documentation to strengthen your grounds in an adjudication application, it is equally important to be selective about what you include. You should carefully consider whether documentation is directly relevant to the outcomes you are seeking before attaching it.

For instance, by including 10 years of correspondence that is not directly relevant, you detract from the documentation that could clearly advance your outcomes – less is often more in this situation.

Exercising caution when disputing procedural errors

We regularly receive applications where the dispute is based purely on a procedural error.

As a rule of thumb, if you are lodging an application of this kind, you should demonstrate how these procedural errors changed voting outcomes. We have provided a case example to better illustrate this point.

Case example

Michael recently discovered that his body corporate incorrectly counted proxy votes for a general meeting motion. Michael proceeds to lodge an adjudication application seeking the following outcome:

• an order that motion 10 passed at the general meeting of the body corporate held on 20 March 2023 is void.

In his grounds, Michael only relies on section 130 of the Standard Module which does not allow proxy votes for motions of this kind.

Michael failed to identify whether the voting outcomes changed because proxy votes were counted. If the voting outcomes remained the same – even though proxy votes were incorrectly included – it would be unlikely that Michael would be successful in obtaining an order that the motion was void.

It is important not to get too bogged down trying to dispute every procedural error that occurs.

As observed by the adjudicator in the matter of Watermark Residences [2021] QBCCMCmr 202, the body corporate legislation is: “lengthy, technical and complex… 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…law, or masters of community management.”

The reality is mistakes will inevitably be made in bodies corporate. If technical errors are the focus of your application, it is for you to demonstrate the detrimental impact of those errors – not to simply point out errors.

We that hope that this article gives you a solid foundation to work from if you are lodging a dispute application in the future. If you do not take the time to familiarise yourself with the relevant requirements before lodging an application, you are more likely to encounter obstacles through the dispute resolution process.

In addition to this article, you must refer to the guides for conciliation and adjudication that accompany the application forms. We also strongly advise you to read the relevant practice directions about dispute resolution that are available on our website.

In view of the time and effort invested in an application, it is in your best interests to equip yourself with the necessary knowledge from the outset.

This article was contributed by Jane Wilson – Commissioner for Body Corporate and Community Management