Bdy Crprate and Cmmunity Management and Other Legislatin Amendment Bill 2010 April 2011
The was passed in Queensland Parliament n 6 April 2011 and will receive Ryal Assent shrtly. Please find belw the majr aspects f changes t the legislatin. Disclsure Obligatins Sales f Existing Lts The Bill amends sectin 206 f the Bdy Crprate and Cmmunity Management Act 1997 (BCCM) n its cmmencement t require disclsure within the disclsure statement f: i. the amunt f annual cntributins currently fixed by the bdy crprate as payable by the wner f the lt; and ii. the extent t which the amunt mentined in subparagraph (i) is based n the cntributin iii. the extent t which the amunt mentined in subparagraph (i) is based n the interest iv. that the cntributin schedule lt entitlements, and interest schedule lt entitlements, fr the lts included in the scheme are set ut in the cmmunity management statement fr the scheme; and the disclsure statement t be accmpanied by a cpy f the cmmunity management statement fr the scheme The Bill als inserts a new sectin 206B which creates an bligatin fr a seller t disclse t a buyer a new versin f the cmmunity management statement within 14 days if ne is recrded after a cntract is entered int but befre it settles. A buyer may terminate a cntract within 14 days after receiving the new cmmunity management statement if they wuld be materially prejudiced if cmpelled t cmplete the cntract, given the extent t which the new cmmunity management statement is different frm the cmmunity management statement last advised t the buyer. New terminatin rights The Bill als inserts new rights f terminatin f a cntract fr a buyer under sectin 209 if the cpy f the cmmunity management statement that was attached t the cntract when it was entered int is different frm the cmmunity management statement mst recently advised t the buyer, and the buyer wuld be materially prejudiced if cmpelled t cmplete the cntract, given the difference; and sectin 209A where the seller is the riginal wner fr the cmmunity titles scheme and the buyer reasnably believes a. the cntributin schedule lt entitlements fr the lts included in the scheme are incnsistent with the cntributin schedule principle n which they were decided; and b. the buyer wuld be materially prejudiced if cmpelled t cmplete the cntract. The new cntributin schedule principles are utlined belw. Transitinal arrangements- Cntract given t a buyer but nt signed by bth parties 2011 Queensland Law Sciety. April 2011 page 1
The Bill includes new sectin 394 which states: 394 Applicatin f s 206 (1) This sectin applies in relatin t the sale f a lt included in a cmmunity titles scheme (a) if a cntract fr the sale f the lt t the persn wh prpses t buy the lt (the buyer) has nt been entered int befre the cmmencement; and (b) whether r nt the persn wh prpses t sell the lt (the seller) t the buyer has cmplied with previus sectin 206 in relatin t the sale. (2) The seller must give the buyer a disclsure statement cmplying with current sectin 206 befre the buyer enters int a cntract t buy the lt. (3) If the seller has, befre the cmmencement, given the buyer a disclsure statement under previus sectin 206, the seller cmplies with current sectin 206 in relatin t the buyer if (a) the seller gives the buyer a new disclsure statement that cmplies with current sectin 206; r (b) the seller gives the buyer a written ntice that (i) states the matters mentined in current sectin 206(2)(b); and (ii) is accmpanied by a cpy f the cmmunity management statement fr the cmmunity titles scheme. (4) In this sectin current sectin 206 means sectin 206 as in frce immediately after the cmmencement. previus sectin 206 means sectin 206 as in frce frm time t time befre the cmmencement. The transitinal prvisins apply t cntracts given t a buyer prir t cmmencement but nt signed by bth parties at the time f cmmencement. T cmply with this sectin a seller after cmmencement is required t: 1. give a new disclsure statement in cmpliance with new s 206; r 2. if a disclsure statement was already given t the buyer a written ntice stating the infrmatin in new s 206(2)(b), which includes the statements utlined abve and a cpy f the CMS. The transitinal prvisins require the new disclsure statement t be given befre the buyer enters a cntract t buy the lt. While it is nt clear frm s 206, the cnservative view is that a buyer enters a cntract t buy when the buyer signs a cntract. Therefre, where a seller has nt signed but a buyer has signed a cntract prir t cmmencement, it will be prudent t reissue the cntract fr signing, tgether with the disclsure statement in cmpliance with the new prvisins. It shuld be nted that a failure t prvide a disclsure statement t a buyer prir t signing will allw the buyer t terminate the cntract at any time prir t settlement under s 206(7). Disclsure Obligatins Sales f Prpsed Lts The Bill amends sectin 213 f the BCCM t require the disclsure statement t include: i. the amunt f annual cntributins reasnably expected t be payable t the bdy crprate by the wner f the prpsed lt; and ii. iii. iv. the extent t which the amunt mentined in subparagraph (i) is based n the cntributin the extent t which the amunt mentined in subparagraph (i) is based n the interest that the cntributin schedule lt entitlements, and interest schedule lt entitlements, fr the lts included in the scheme are set ut in the prpsed cmmunity management statement fr the scheme New Terminatin Rights The Bill als creates new rights f terminatin f cntracts in sectin 217 where: new sectin 66(1)(db)(i) f the BCCM t state the cntributin schedule principle n which the cntributin schedule lt entitlements have been decided and des nt include the statement; the cmmunity management statement mst recently advised t the buyer is required under new sectin 66(1)(db)(ii) f the BCCM t explain why the cntributin schedule lt entitlements are nt equal and des nt cntain the explanatin; new sectin 66(1)(db)(iii) f the BCCM t include sufficient details abut the relativity principle t shw hw individual cntributin schedule lt entitlements were decided by using it (the details) and des nt include the details; new sectin 66(1)(dc)(ii) f the BCCM t explain why the interest schedule lt entitlements d nt reflect the respective market values f the lts included in the scheme and des nt cntain the explanatin The buyer may terminate nly if materially prejudiced by the missin. A new right f terminatin f a cntract fr sale f a prpsed lt is inserted in sectin 217A where the seller is the riginal wner fr the cmmunity titles scheme and the buyer reasnably believes either i. the prpsed cntributin schedule lt entitlements fr the lts prpsed t be included in the scheme are incnsistent with the cntributin schedule principle n which they are prpsed t be decided; r ii. the prpsed interest schedule lt entitlements fr the lts prpsed t be included in the scheme are incnsistent with the market value principle; and the buyer wuld be materially prejudiced if cmpelled t cmplete the cntract Transitinal arrangements - Cntracts given t a buyer but nt signed by bth parties page 2 April 2011 April 2011 page 3
The Bill includes new sectin 395 which states: 395 Applicatin f s 213 (1) This sectin applies in relatin t the sale f a lt intended t cme int existence as a lt included in a cmmunity titles scheme when the scheme is established (a) if a cntract fr the sale f the lt t the persn wh prpses t buy the lt (the buyer) has nt been entered int befre the cmmencement; and (b) whether r nt the persn wh prpses t sell the lt (the seller) t the buyer has cmplied with previus sectin 213 in relatin t the sale. (2) The seller must give the buyer a disclsure statement cmplying with current sectin 213 befre the buyer enters int a cntract t buy the lt. (3) If the seller has, befre the cmmencement, given the buyer a disclsure statement under previus sectin 213, the seller cmplies with current sectin 213 in relatin t the buyer if (a) the seller gives the buyer a new disclsure statement that cmplies with current sectin 213; r (b) the seller gives the buyer a written ntice that states the matters mentined in current sectin 213(2)(a). (4) In this sectin current sectin 213 means sectin 213 as in frce immediately after the cmmencement. previus sectin 213 means sectin 213 as in frce frm time t time befre the cmmencement. Sectin 395 perates in the same way as sectin 394. The sectin applies t cntracts given t a buyer prir t cmmencement, but nt signed by bth parties at the time f cmmencement. T cmply with this sectin after cmmencement the seller is required t give a new disclsure statement in cmpliance with new sectin 213 r if a disclsure statement was already given t the buyer a written ntice stating the infrmatin in new sectin 213. Further disclsure statements after cmmencement There is n change t the requirements f sectin 214 but any further disclsure statement given under sectin 214 after cmmencement shuld cntain the new infrmatin abut lt entitlements in cmpliance with new sectin 213. If the further disclsure statement fails t include this infrmatin a buyer may seek t rely upn sectin 217, if material prejudiced can be prven, t terminate the cntract. There is als an argument that because f the new requirements the disclsure statement if given nw wuld nt be accurate triggering an bligatin t give a further disclsure statement under sectin 214. It is unclear whether the absence f the new infrmatin abut lt entitlements makes the disclsure statement inaccurate. If the lt entitlements have nt changed, the failure t give a further disclsure statement, merely t update the statement in accrdance with new sectin 213 is unlikely t materially prejudice the buyer. If hwever a further disclsure statement is required after cmmencement fr sme ther reasn, the new statements in sectin 213 shuld be included. Cntributin and Interest Schedule Principles The Bill amends sectin 46 t require: Fr the cntributin schedule fr a cmmunity titles scheme established after the cmmencement f this subsectin, the respective lt entitlements must be cnsistent with either a) the equality principle; r b) the relativity principle. Fr the interest schedule fr a cmmunity titles scheme established after the cmmencement f this subsectin, the respective lt entitlements must be cnsistent with the market value principle The Bill sets ut in new sectin 46A the equality principle and the relativity principle fr deciding cntributin schedule lt entitlements. The Bill sets ut in new sectin 46B the market value principle fr deciding interest schedule lt entitlements. Sectin 66 f the BCCM is amended t require certain disclsures abut cntributin and interest schedules principles in cmmunity management statements, these include: fr existing schemes which are nt adjusted after cmmencement f the Bill, if the cntributin schedule lt entitlements fr each lt included in the scheme are nt equal, explanatin f why they are nt equal; fr schemes created r adjusted after the cmmencement f the Bill: stating the cntributin schedule principle n which the cntributin schedule lt entitlements have been decided; if the cntributin schedule lt entitlements have been decided in accrdance with the equality principle and are nt equal, explanatin f why they are nt equal; if the cntributin schedule lt entitlements have been decided in accrdance with the relativity principle including sufficient details abut the principle t shw hw individual cntributin schedule lt entitlements fr the lts were decided by using it; if the interest schedule lt entitlements reflect the respective market values f the lts stating that the interest schedule lt entitlements reflect the respective market values f the lts; if the interest schedule lt entitlements d nt reflect the respective market values f the lts explanatin f why the interest schedule lt entitlements d nt reflect the respective market values f the lts. Transitinal Arrangements The Bill includes new sectin 375 which prvides a cncessin fr the setting f the interest schedule lt entitlements fr a scheme which has nt cme int existence at the time f cmmencement, but where a cntract fr the sale f a prpsed lt has been frmed prir t cmmencement. In that case the interest schedule lt entitlements are nt required t be calculated n the basis f market value but may be calculated with regard t the structure f the scheme, the nature, features and characteristics f the scheme and the purpse fr which the lts are used. page 4 April 2011 April 2011 page 5
Adjustments f existing schemes The Bill sets ut new prcesses fr adjustment f cntributin schedules thrugh either: a reslutin f the bdy crprate withut dissent (new sectin 47A); r by rder f specialist adjudicatr r QCAT (s 47B Bdy Crprate and Cmmunity Management Act 1997 ) if: there was a material change t the scheme necessitating a change t the cntributin schedule lt entitlements the scheme was established after cmmencement and an wner cnsiders that the cntributin schedule lt entitlements are nt cnsistent with the deciding principle fr the scheme (ie equality principle r relativity principle). New sectin 48A sets ut the criteria a specialist adjudicatr r QCAT must use fr deciding whether cntributin schedule lt entitlements are cnsistent with a deciding principle. The interest schedule lt entitlements may be adjusted by an rder f an adjudicatr r QCAT (s 48 Bdy Crprate and Cmmunity Management Act 1997), but must be cnsistent with the market value principle (as defined in s 46B Bdy Crprate and Cmmunity Management Act 1997). Transitinal Arrangements The Bill includes: new sectins 376 and 377 which deem that a pre-cmmencement adjustment actin ceases t have effect and is deemed never t have existed n cmmencement. These actins include: mtins and reslutins f bdies crprate fr adjustment f cntributin schedules which has either nt been made r put int effect as at cmmencement; an applicatin t a specialist adjudicatr r QCAT fr an adjustment f a cntributin schedule which has either nt been decided r put int effect as at cmmencement; r an appeal against a decisin f a specialist adjudicatr r QCAT abut adjustment f a cntributin schedule which has either nt been decided r put int effect as at cmmencement. new sectins 378 t 390 which set a prcess by which an wner in an existing scheme where an adjustment rder has previusly been made t have the scheme s cntributin schedule lt entitlements reverted back t the pre-adjustment rder figures. This prcess will nly be available fr 3 years after cmmencement. page 6 April 2011