by Katrina Brown | Feb 13, 2013 | Body Corporate Law, Strata/Community Living
There are five different Body Corporate regulation modules to be considered when a body corporate is assessing the scheme. This is depending on the individual circumstances of the scheme. Over the following weeks we will be reviewing each Module.
The first Module to be discussed is the “Standard Module.”
The Standard Module
A new regulation module, the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module) commenced on 30 August 2008. This regulation module replaces the Standard Module regulation which commenced in 1997. This Body Corporate regulation module is considered to be highly regulated and is generally used in schemes which are predominantly residential.
Committee- Section 98
It is essential for a Standard Module scheme to have a Committee; this is chosen at the compulsory Annual General Meeting. The Committee must compromise of a chairperson, secretary and treasurer. Members of the body corporate (the lot owners) are eligible to be voting members of the Committee and may nominate themselves for Committee membership.
Expenditure- Section 151
The body corporate of a Standard Module scheme is able to limit Committee spending, although, if no amount is set, the amount is then defaulted to multiplying the quantity of lots included in the scheme by $200.00. For example, if there are 200 lots in a particular scheme, the Committee spending amount is $40,000.00.
Financial- Section 146
A Standard Module scheme must establish and maintain an administrative and sinking fund.
The following must be paid into the Sinking fund:
(a) the amount raised by way of contribution to cover anticipated spending of a capital or non-recurrent nature (including the periodic renewal or replacement of major items of a capital nature and other spending that should be reasonably met from capital); and
(b) amounts received under policies of insurance for destruction of items of a major capital nature; and
(c) interest from investment of the sinking fund.
The administration fund incorporates recurrent spending such as maintenance of gardens and lawns on common property.
Records- Section 204
Standard Module scheme Committee members are allowed reasonable access (without payment of a fee) to all body corporate records. General members of the body corporate are entitled access to the records on the exchange of payment.
Improvements to common property by a lot owner- Section 164
If authorised by ordinary resolution of the body corporate, a lot owner may make an improvement to the common property. If the improvement is minor ($3000 or less), the Committee may give approval.
Body Corporate Debt- Section 145
(2) If the amount of a contribution or contribution installment has been outstanding for 2 years, the body corporate must, within 2 months from the end of the 2-year period, start proceedings to recover the amount.
Action can be commenced earlier, but body corporate need to be careful that they apply a reasonable approach.
We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
In the coming weeks we will address the Accommodation, Small, Commercial and two-lot scheme modules.
Stay Tuned!
by Katrina Brown | Feb 12, 2013 | Body Corporate Law, Commercial Law, Credit Management, Litigation Process
After a Claim and Statement of Claim have been lodged with the Court and returned to us, the next step is to “serve” the documents on the Defendant in accordance with the Uniform Civil Procedure Rules 1999 (Qld) (UCPR).
Rule 105 of the UCPR states:
(1) A person serving an originating process must serve it personally on the person intended to be served.
Service on an Individual:
Personal Service is performed by giving the document to the person mentioned in the document. If the person refuses to accept service, the Rules permit the service agent serving the document to place the document down in the person’s presence and then explain what has been placed by the person.
Occasionally, we may be required to conduct a skip trace to find a Defendant. A skip trace requires the engagement of an investigator to search a wide range of public and private records to find the historical movements of the Defendant. Whilst a skip trace may not find the Defendant, it may bring to light contacts which we can use then to find the Defendant.
If personal service cannot be achieved as a result of demonstrated evasion by the Defendant or it can be demonstrated service can be undertaken by alternative means to personal service (although traditional service attempts have been exhausted), an Application for Substitute Service is the next option. Before such an Application can be considered, we must provide evidence as to all attempts undertaken to date relative to locating and serving the Defendant, as well as evidence to demonstrate that a proposed Alternative is likely to provide notice to the Defendant of the proceedings.
Service on a Company:
If the Defendant in the matter is a company, service is be undertaken by sending the documents by post to the Defendant’s registered office.
After Service:
Pursuant to the UCPR, the Defendant has 28 days from the date of service to file a Defence or reach an agreement with the Plaintiff (such as paying a debt in full or by entering into a payment plan, or engaging in conduct that is required by the Plaintiff of the Defendant in the Claim and Statement of Claim).
If no action is taken by the Defendant following such period, there are a number of options available, but the most logical in cases in which the debt is “liquidated” (i.e. for a fixed amount) is to seek a Default Judgment against the Defendant. Following entry of a Default Judgment against the Defendant, the Plaintiff is then empowered to “enforce” the Default Judgment.
Effectively, service is the second “starting gate” to the process of chasing a matter. Service can take a considerable period in many cases in which the Defendant is an individual, and is quite frankly, the most frustrating part for many of our clients.
We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
by Katrina Brown | Feb 11, 2013 | Commercial Law
A Shareholders Agreement is essentially the “Nuptial Agreement” for business partners in a company. Similar agreements exist in each type of business entity type (such as Unit Trusts, Partnerships, Joint Ventures, etc.). The design and topics of the Shareholders Agreement is personal to the partners. Some of the common topics are:
1. Changes in health or availability of key persons – Business interruption as a result of a death or disability of a business partner and/or key person can destroy a company quickly. Structuring for changes of health or availability of key persons requires consideration of whether the partners want to deal with the spouses and “others” of the unwell/deceased partner – and if not, how the partners plan to work through the event;
2. Requirements for funding operational costs and capital requirements – The source of ongoing funding requirements of a business are one of the most common sources of business breakdown. During the planning process, the objectives of the partners are hashed through. Some partners stipulate that additional capital requirements must be funded by the partners, whereas other partners only agree to commence operations on the basis that no further capital requirements are needed – dealing with either of these options requires discussion and detailing of terms of agreement to prevent business disruption;
3. Rules of operation and accountancy – A successful (or unsuccessful) business can be operated with a wide range of management mechanisms. This topic is one of the most critical in staging a viable enterprise, because it is vital that the partners understand and agree to the rules of engagement for staff, spending, development and long term objectives. We recommend a condition of all Shareholder Agreements is that a Financial Business Plan be developed (or at least consented to) each year of operation, and that the Business Plan provide the basis for approved operations and accountancy for each year. When all partners maintain an eye on such matters, they remain connected and agreeable to the “bigger picture”; and
4. Limitation or restriction on new Shareholders – Many partners start a business with a common thread – they like, or at least respect, each other. Something about the relationship from the start is determined to “work.” The partners, however, do not anticipate in many circumstances one of the other partners seeking to exit the business. It is critical that the rights and restrictions in terms of one partner selling out to a third party be considered. Some of the more common solutions include a mandatory first right of refusal to the existing partners and/or a “drag along” right that requires minority holders to “sell out” at a stage and/or “tag along” right that rights the seller to allow the others to participate in a sale on the same terms as the seller. The options relative to this restriction are quite broad, and the discussion of this topic needs to be considered. If done incorrectly, or not at all, the risk of a “minority oppression action” or “wind up” is very real.
Importantly, there is no such thing as an “off the shelf” Shareholder Agreement. If a Shareholder Agreement is not tailored to the business and its partners, the Agreement may result in an exacerbation of issues because one or more of the partners may argue lack of consideration or understanding and seek to have the entire Agreement set aside. Whilst there are threshold burdens of proof in such actions, the issue is that that without adequate discussion and consideration – evidence that all parties knowingly entered into the arrangement can be sufficiently lacking to prevent enforceability.
Nautilus’ legal professionals have a wide range of experience in negotiating and drafting simple to complex Shareholder Agreements, including terms of buy/sell, liaising with business insurance brokers for insurances and alike. We consult with clients across Queensland and New South Wales. If you require services outside of these jurisdictions, we can refer you to Firms which can assist you. We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au.
Thank you for considering Nautilus Law Group.
Submitted by Katrina Brown BA JD ATIA TEP SSA, Senior Commercial and Property Lawyer, Nautilus Law Group katrina@nautiluslaw.com.au
by Katrina Brown | Feb 11, 2013 | Nautilus Law, Powers of Attorney and Estate Planning, Succession Law
Have you thought much of your superannuation? If you are young, and you have never seen an Estate Planning Lawyer – count yourself a member of a very large majority. The most common comments we hear are:
- “I’m only young, I will worry about it later.”
- ‘I’m not sick or dying, why do I need to do anything?”
- “I have nothing of value, no house or money, why do I need to see a lawyer?”
People forget they have one asset that can be of significant value – superannuation. Equally important, they do not consider the devastation they will cause to their family, if they die without leaving directions for their family.
Proper Estate Planning is not only for the elderly or wealthy. Clients often believe that if they do not have real estate, or significant savings or investments, that they do not have anything of value to be distributed in their Estate – but they forget their superannuation has a value, and often times has an attached life insurance benefit.
If you have worked during your lifetime, you will have accumulated superannuation. This is a valuable asset which must be distributed upon your passing. Many superannuation funds also provide life insurance to their members. If your superannuation has life insurance, the Superannuation Trustee may pay the death benefits to your nominated beneficiaries (which may include your spouse, children or dependents or your Estate). Often times, the Superannuation Trustee pays directly to your Estate. Remember, unless the Superannuation Trustee determines it to be so – your superannuation does not form part of your estate.
One of our primary recommendations when consideration superannuation planning, is to ensure that our clients have a nominated “binding death nomination” made on their fund – which requires the Superannuation Trustee to pay death benefits to only those intended by our client. Some superannuation funds do not permit “binding death nominations”, and for those funds we consider a “non-binding nomination.” In our experience, families who are left to deal with superannuation trustees where no nomination has been made, battle with guilt and grief, and the perception that they are “caring only about the money.” By simply making the nomination, the family can rely on this showing as a sign of our client’s actual intentions.
As a paralegal in the Estate Team, I have witnessed the nightmare that parents and families go through when they have to deal with the unforseen death of their child and loved one.
I have worked on a number of similar files over the last year, involving the death of young adults with separated parent. One of the files involved a young adult who passed away with a large superannuation insurance death benefit. His mother and father divorced when the child was young. The father was absent from the child’s life and provided little to no financial support to the mother, and did not seek to maintain a relationship with the child. The mother, however, provided extensive support and encouragement for the child through his adult life, often to her own financial detriment, and was a present and influential presence in the child’s life. The child unexpectedly passed away leaving a substantial amount of superannuation. The mother was tortured in having to prepare sworn statements about the child’s history, which could have readily been avoided if the child had merely nominated her as his binding death nominee. In the end, the funds were paid to the mother, but not without significant personal devastation.
If the Superannuation Trustee had nominated to pay the funds to the child’s Estate, because he had no Will, the family would have had to apply for probate and the rules of intestacy would have applied, being that the benefit would have been paid 50% to the child’s mother and 50% to the child’s father. We expect, knowing the history, that the child would have not been agreeable to this.
However, if he had left a Will, at least he would have avoided intestacy, and could have directed the entire benefit to his mother. Fortunately, it did not have to go through this process, because we prevailed at winning the distribution at the Superannuation Trustee level.
Further, the value of leaving your direction, even in a Simple Will, cannot be overstated in terms of helping families overcome the loss and devastation of your passing.
We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
by Katrina Brown | Feb 9, 2013 | Body Corporate Law, Strata/Community Living
The Body Corporate and Community Management Act 1997 (“the Act”) provides that a Body Corporate Committee shall (subject to delegation of any functions to a Body Corporate Manager or external service provider):
- Manage the Body Corporate and oversee compliance with by-laws;
- Obtain adequate and correct insurance policies;
- Organise repairs and maintain Common Property (and, in some instances, property adjoining Common Property);
- Communicate with and Report to Body Corporate Owners;
- Manage, deal with and organise third parties and contractors;
- Undertake financial reporting and accounting, including:
- Preparing annual budgets and contribution proposals; and
- Issuing levy notices and monitoring levy payments (including levy recovery legal proceedings);
- Represent the Body Corporate in legal proceedings;
- Ensure the Property is compliant with Queensland and Commonwealth Legislation, including but not limited to:
– Occupational health and safety;
– Fire safety; and
– Glass and structural mandates.
The obligations placed on the Committee can be daunting and onerous. However, a Body Corporate is authorised, pursuant to the Act, to delegate many aspects of the executive and/or administrative responsibilities of “managing” a Body Corporate to a service provider, which is often referred to as a “Body Corporate Manager.” (Section 119 of the Act) The Committee and Body Corporate Manager, collectively, service the obligations to the Body Corporate Owners.
The Body Corporate may elect to delegate all, or few, of the executive and/or administrative tasks otherwise reserved to a Body Corporate Committee. For example, in small complexes (under 8 Units), a Body Corporate Manager may be retained to perform the financial reporting obligations, but the Committee will remain all other tasks (such as organising contractors, providing notice to owners, undertaking meetings, etc). Most medium to larger complexes employ Body Corporate Managers to perform a far broader scope of tasks, with the Committee retaining more of an executive “supervisory” role with insight on strategic matters, but hands off on the administrative duties.
In order to retain a Body Corporate Manager, the engagement must be in writing, state the term of engagement, state the functions the Manager is required or authorised to carry out and state the basis for which payment of the services is made. In defining the functions authorised, the engagement must also identify if the Manager is permitted to engage in any executive decisions. An engagement may not exceed a 3 year period; however, no minimum term exists. Upon the expiry of the 3 year period, the Manager must renew the engagement with the Body Corporate.
The benefit of this flexibility of engagement, is that Bodies Corporate can “test” a Body Corporate Manager on a shorter term, and if happy, then engage the Manager for the longer term.
If, however, the Body Corporate is dissatisfied with the services of a Manager, during the period of an engagement agreement, the Body Corporate may terminate a Manager in some circumstances (including circumstances in which a Manager commits certain offences). (See Sections 129 and 130 of the Act)
Nautilus works with many outstanding Body Corporate Managers across Queensland, and we certainly support the retention of Managers for the bulk of Bodies Corporate. The scope of works can be broad, or limited – but in all cases, the Committee is able to rest more comfortably knowing they have a resource available to them. This is especially important for large Bodies Corporate, because the Committee members usually have significant personal obligations and are not capable (nor required) to work extensively for the Body Corporate (which would otherwise be required in the absence of a Body Corporate Manager appointment).
We appreciate that from time to time Committees may question the services offered by a Manager, or may wish to be provided advice on Management Agreements. Our Team are seasoned at reviewing Agreements, and assisting Queensland Bodies Corporate with such matters.
We offer an initial no charge, no obligation consultation and offer such services by telephone, Skype, email or on location (Brisbane to Gold Coast only). We also fly to Cairns, Townsville, Mackay and service the Sunshine Coast on a quarterly rotating schedule (although the bulk of services to these regions occur by telephone, Skype or by email).
We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
