Mahoneys continues to lead the way in the termination and sale of ageing community titles schemes in Queensland.
After successfully assisting the owners of Nobbys Outlook to sell their community title scheme to developers for more than $23 million, Mahoneys has now guided the lot owners of Voyager Resort through the process of appointing a trustee for sale.
When the matter is completed, Voyager Resort will be the first community titles scheme that is owned and operated as a timeshare to be terminated and sold in Queensland by a statutory trustee for sale.
Furthermore, this achievement is notable because Mahoneys for two reasons:
First, Mahoneys was able chart a path for owners which avoided the need to obtain a “resolution without dissent” of all owners – which in the past has been a significant road block for owners.
Second, Mahoneys secured the appointment of three of the owners as the trustees for sale (rather than a liquidator), thereby reducing costs and maximising potential returns.
Background on Voyager Resort
Voyager Resort (Resort) is a 15-level tower constructed in the 1980’s at Broadbeach on the Gold Coast. The units in it were sold and the resort was operated as a timeshare scheme. Owners purchased discrete “weeks” of time in each individual lot, and were able to either stay at the Resort or allow the units to be let out during those weeks.
Each of the 60 separate units had 51 separate “weeks” allocated to them, with 1 week per unit reserved for maintenance. A total of 3,060 weeks were thus capable of being owned.
Along with receiving an individual title for the week(s) they owned, each owner obtained a share in Voyager Resort Limited (Company). The Company managed the affairs of the resort, levied owners for contributions to keep it in good repair and, for the majority of owners, oversaw the letting of units.
Each owner’s share in the Company entitled them to vote at general meetings of the company. The rights of the owners in their capacity as members of the Company were dictated by the Company’s articles of association.
Difficulties with timeshare schemes
The popularity of timeshare arrangements has waned over time. Despite returning a profit, it became more and more difficult for owners to sell their interests in the Resort.
As owners fell delinquent in their levies, passed away or simply stopped communicating with the Company, the remaining members were left shouldering the financial burden of the resort’s upkeep.
As the Resort continued to age, maintenance costs increased. Owners who wanted to sell were faced with an ageing resort in a changing market that was not interested in purchasing a single week in a timeshare scheme.
The time had come to sell the Resort.
The legalities around terminating a community titles scheme
Ordinarily, if a body corporate wants to terminate a community titles scheme it must comply with requirements of the Body Corporate and Community Management Act (BCCMA). The Act requires that termination may occur only if:
- there is a resolution without dissent; or
- there is an agreement between all registered proprietors of scheme land, and each lessee under a registrable or short lease to which scheme land is subject; or
- the District Court decides that it is just and equitable that the scheme be wound up.
How this played out with Nobbys Outlook and Voyager
In 2013, Mahoneys assisted the Body Corporate of Nobbys Outlook to obtain an order to terminate that scheme. This remains the only exercise of the District Court’s just and equitable winding up power since the commencement of the BCCMA in 1997.
In Voyager, a small handful of owners (five out of approximately 470 who voted) refused to agree to sell. This meant a resolution without dissent was not possible.
However, due to the fact that the Company had acquired additional weeks (as delinquent owners fell behind on their levies) a new possibility arose.
The Property Law Act (1974) enables the owners of properties held in co-ownership to apply to the court for the appointment of statutory trustees for sale.
Because the Company had acquired at least one interest in every single individual unit, it was a co-owner of each individual unit, (along with the other 1062 owners in the Resort).
Laying the groundwork
Prior to bringing the application to appoint statutory trustees, Mahoneys was instructed to advise the Company on the process.
Resolutions of the Company had to be drafted and put to a general meeting. Those resolutions included:
- approving the sale
- dictating how the trustees, if appointed, must deal with the proceeds of sale
- streamlining the legal requirements for commencing the application
- resolving that, upon completion of the sale, the Company be wound up voluntarily.
The Company also had to locate and serve the application on every owner who held an interest in the Resort.
After filing the application for the appointment of the trustees, interlocutory orders were sought regarding service of the application on each of the 1000+ owners. This included proposing mechanisms by which the application might be brought to the attention of those owners who had fallen out of communication with the Company.
The application for appointment of statutory trustees
On 25 March 2022, the application was heard by the Supreme Court of Queensland seeking the appointment of statutory trustees.
Ordinarily statutory trustees would be professional liquidators or accountants. However, with Mahoneys’ assistance, the Company successfully sought the appointment of three of its directors to minimise the cost to owners of the sale.
In the end, the Court was satisfied that the directors were appropriately qualified and made an order appointing them as statutory trustees. It is expected that this appointment will save the owners approximately $400,000 in professional costs.
The orders were the first of their kind made in Queensland. Previous attempts to wind up timeshare schemes had failed for a number of reasons – all of which were explicitly and directly addressed by the Company and Mahoneys when preparing for and bringing the application.
The outcome is an excellent result for the owners, and will allow them to take advantage of the Gold Coast’s booming property market.