QLD: Administrator’s Costs – How to Make the Responsible Party Pay

This article is about how Queensland courts can make the lot owner who caused a body corporate administration pay the administrator’s costs instead of innocent owners.

Imagine a four-lot community titles scheme having one owner of three lots, and another owner for the remaining lot. A dispute between the two lot owners develops, the Body Corporate falls into dysfunction and an Adjudicator appoints a general administrator to the body corporate to remedy that dysfunction. The majority (‘problem’) owner, hinders and obstructs the administrator.

As a direct result, significant costs are run up over the sixteen months of the administration, all of which would have been avoided, if the majority owner had simply cooperated with the administrator, or had run the Body Corporate properly before the administration commenced (for example, by causing common property maintenance to be done).

The Body Corporate and Community Management Act 1997 (BCCM Act) mandates that the body corporate must pay the administrator’s remuneration (the administrator’s charges and the other costs of the administration), which now exceeds $120,000. Given that all of the contribution schedule lot entitlements are equal, the minority lot owner, who had nothing to do with those avoidable costs being run up, is prima facie obliged to pay one quarter of the total costs, being $40,000.

Can this injustice be addressed? The answer is ‘yes’.

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In a recent Magistrates Court decision, the Court used section 314 of the BCCM Act to exempt the minority lot owner from payment of the administrator’s remuneration, which the majority lot owner had unnecessarily, improperly, or unlawfully caused to be incurred; see Kleinschmidt v Body Corporate for the Bantry CTS 2184 & Anor [2025] QMC 33 (Bantry).

Since 4 June 2021, I have held continuous appointments as either a General Administrator (appointed by an Adjudicator) or an Enforcement Administrator (appointed by the Magistrates Court) across multiple administrations.

Enforcement Administrations are about enforcing an Adjudicators order. A person with the benefit of an Adjudicators order, which order has not been complied with, can apply to the Magistrates Court to appoint an administrator over the defaulting party. If the defaulting party (typically a lot owner, though it may be a body corporate) is not ready, willing, and able to comply with the Adjudicator’s order, the Magistrates Court will usually appoint an Enforcement Administrator to get the job done.

Mr. Sinclair of Counsel (as His Honour Magistrate Sinclair then was), and I formulated the ‘ready, willing, and able’ test. That test was adopted by the Magistrates Court in Shaw v Body Corporate for Donnelly House CTS 37465 [2015] QMC 27 March 2015 and affirmed in the body corporate’s unsuccessful appeal to the District Court in Body Corporate for Donnelly House CTS 37465 v Shaw [2015] QDC 139.

Making the party who caused the administration (the party who refused to comply with the Adjudicator’s order) responsible for the administration costs is a reasonably straightforward matter within Enforcement Administrations. The matter is already before the Magistrates Court and, even though the BCCM Act mandates that Administrator’s Remuneration must be paid by the body corporate (in every case), the applicant for the appointment of an Enforcement Administrator can seek orders from the Court which take advantage of section 314.

Section 314 of the BCCM Act provides that:

In a proceeding by or against the body corporate for a community titles scheme, a court may order that an amount payable under a judgement or order against the body corporate be paid by the owners of particular lots included in the scheme in proportions fixed by the court.

If an order is sought under subsection (1) against the owner of a lot who is not a party to the proceeding, the owner must be joined as a party.

These criteria are easily met within an application for the appointment of an Enforcement Administrator, and Courts now routinely make orders for the appointment of Enforcement Administrators such that:

the Administrator’s Remuneration must be paid by the body corporate, and the body corporate remains primarily liable to pay the Administrator’s Remuneration; and

in respect of any contributions (levies) raised to pay the Administrator’s Remuneration, it is only the defaulting lot owner who is liable to pay those contributions (i.e. the ‘innocent’ lot owner/s are not liable to contribute).

The net result is that it’s only the defaulting lot owner who pays the Body Corporate (contributions) which the Body Corporate then uses to pay to the Administrator.

That approach is now reasonably well settled with respect to Enforcement Administrations, but it’s a different story in General Administrations.

A General Administration appointment occurs when an Adjudicator orders that an Administrator be appointed over a dysfunctional Body Corporate.

In my years of experience acting as an Administrator and, before that, in helping clients have Administrators appointed, dysfunctional bodies corporate are always dysfunctional for a reason and, almost always, that reason has two legs.

Sometimes there is only one ‘problem’ lot owner but, at worst (and widest), I have seen dysfunction caused by a majority of committee members, typically in smaller schemes, because unlike in larger schemes with more lot owners, there are no replacement committee members readily available when the bad ones get sacked at a general meeting.

As with Enforcement Administrations, in General Administrations the Administrator’s Remuneration must be paid by the body corporate.

Where the body corporate’s dysfunction has been caused by one, or even up to even five or six lot owners, how can those costs be sheeted home to those responsible? How can the people who caused the administration costs, the ‘problem’ lot owners, be made to pay?

As you can see above, the relief in section 314 is only available where there is a proceeding, and there must be a judgement or order for an amount payable by the body corporate.

The (problem) lot owners can be joined after that judgement or order has been made, and also in situations where they were lot owners at the time they caused the trouble which led to the court order, but are no longer lot owners when the section 314 order is made. This is what happened in Body Corporate for Donnelly House v Shaw [2016] QDC 132 (3 June 2016).

In a General Administration, there are two things missing for a section 314 order to be made. First, there is no court (money) order and second, the problem lot owners have not been joined to the relevant proceeding.

In my second General Administration of the Body Corporate for the Bantry CTS 2184, the majority lot owner (who owned 3 of the 4 lots) refused to pay contributions that were raised to pay my Administrator’s Remuneration.

During that Second Administration, I had been very careful to identify Administrator’s Remuneration which had been caused solely by the majority lot owner. I did, of course, do the same in respect of the minority lot owner, but the minority lot owner did not cause any unnecessary costs to be incurred.

Invoices were issued for the Administrator’s Remuneration, to the body corporate, detailing which lot owner (in my view) was liable for the various components of the Administrator’s Remuneration. The body corporate failed or refused to pay, because the majority lot owner deprived the body corporate of funds to pay.

The body corporate was given multiple opportunities to attend to payment, as was the majority lot owner. At the same time, as Administrator, I foreshadowed that, if the Administrator’s Remuneration went unpaid, I would:

commence proceedings in QCAT for the unpaid Administrator’s Remuneration (broken down into 6 categories, one claim per category);

once orders were obtained, I would file the orders in the local Magistrates Court to commence the enforcement process; and

seek section 314 orders against the majority (‘problem’) lot owner.

Exactly that came to pass.

On 12 December 2025, Magistrate Madsen of the Maroochydore Magistrates Court determined my section 314 applications and agreed that, in relation to the six categories of unpaid Administrator’s Remuneration that I had received QCAT judgements for, the majority lot owner was responsible for giving rise to the unpaid Administrator’s Remuneration improperly, unnecessarily, and / or unlawfully.

His Honour also agreed that my work involved in bringing the section 314 applications was Administrator’s Remuneration and, therefore, liable to be paid by the majority lot owner, rather than via a traditional costs order.

A traditional costs order would have resulted in less than an indemnity recovery, whereas the order made by the Court ensured that all the work associated with the section 314 applications was recoverable, along with the rest of the unpaid Administrator’s Remuneration.

The net result? The minority, innocent lot owner was saved from having to contribute $40,000 in unpaid Administrator’s Remuneration, none of which that lot owner had caused to be incurred.

Instead, the majority (‘problem’) lot owner is now liable to pay the whole lot.

The mechanism for payment is the same as in Enforcement Administrations, whereby:

the QCAT judgements filed in the Magistrates Court are still judgements to be paid by the body corporate to me as former Administrator, and the body corporate remains liable to pay them; and

the body corporate raises the money to pay the orders be issuing contributions (levies), but only to the majority lot owner. The body corporate then receives the contributions, after recovery action if required, and pays the monies over to me, to satisfy the judgments.

While the circumstances in Bantry were unusual (in that there was a majority lot owner who was the ‘problem’ lot owner), the same approach could be used in other General Administrations (with careful planning and execution) to ensure that it is only the ‘problem’ lot owner/s who pays the administration costs.

If you need help with any type of Administration, whether enforcement, general, recovery or termination, contact me or my team at Bugden Allen.

Michael Kleinschmidt
Bugden Allen
E: michael.kleinschmidt@bagl.com.au
P: 07 5406 1280

This post appears in Strata News #781.

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This article has been republished with permission from the author and first appeared on the Bugden Allen Group Legal Pty Ltd website.

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