Katchris [2000] QBCCMCmr 436 (31 August 2000)

PJ HanlyREFERENCE: 0221-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13853
Name of Scheme:	Katchris
Address of Scheme:	24 Croydon Street TOOWONG QLD 4066

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Henry Tung Ngan CHEUNG, the power of attorney for the owner of Lot 1

I hereby order that the application to declare the annual general meeting held on 18 January 2000 invalid, and that another annual general meeting be held, is dismissed.

I further order that for the purposes of the Body Corporate and Community Management Act 1997 (“the Act”) and pursuant to section 229 of the Act, the new financial year end date of the Body Corporate for Katchris Community Titles Scheme 13853 shall be 31 October, in place of the previous financial year end date.

I further order that thereafter each successive financial year for the Body Corporate for Katchris Community Titles Scheme 13853 shall commence on 1 November and terminate on 31 October.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0221-2000

“Katchris” CTS 13853

The applicant, Henry Tung Ngan Cheung, the power of attorney for owner of Lot 1, has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”) that the Annual General Meeting (“AGM”) held on 18 January 2000 be declared invalid and that another Annual General Meeting be held.

Section 223(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a) a claimed or anticipated contravention of the Act or the community management statement; or

b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

In the supporting grounds, the applicant states that the AGM dated 18 January 2000 was loosely based on the provisions of the Body Corporate and Community Management (Small Schemes Module) Regulation 1997 ("the Small Schemes Module") when the applicable regulation module for this community titles scheme is the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module"). Mr Cheung states that as a consequence, only one person has been elected to the committee. Mr Cheung has also made reference to the notice of the AGM not including a voting paper, and that a proper financial report and budgets were not presented to the meeting. Mr Cheung included a copy of the notice of the AGM with his application. He has noted on this copy that the one page notice was all each owner had been given before the meeting.

A copy of the application was forwarded to the body corporate secretary for distribution to all owners and the committee. The body corporate secretary, Mr Day responded by making reference to a letter dated 5 April 2000 in which he informed Mr Cheung that the spirit of the legislation has been observed to the satisfaction of the majority of lot owners. Mr Brannelly of Lot 4 submitted that he was the Chairman, Secretary and Treasurer from 1981 up until early this year when he declined re-election. Mr Brannelly expressed the view that he performed the duties of chairperson, secretary, and treasurer to the satisfaction of all owners, except Mr Cheung.

Mr Day has provided a copy of the minutes of the AGM dated 18 January 2000. The minutes make reference to the Small Schemes Module, and indicate that:

•	The owners of each of the four lots in this scheme were represented at the meeting.
•	The resolutions made on most of the matters considered at the meeting were determined by three votes to one.
•	Issues such as leaking guttering, determining the financial year, the front garden arrangements, and the handling of sewerage repairs were raised at the meeting.
•	A financial statement was tabled at the meeting and a decision was made to raise an annual levy contribution.
•	One person, Mr Day was elected to the committee.

The Community Management Statement for this scheme identifies the Standard Module as the applicable regulation module. This module will apply to this scheme until such time as the registrar of titles records a new Community Management Statement for the scheme.

In the grounds to the application, the applicant has referred to a number of procedural deficiencies concerning the convening and holding of the AGM dated 18 January 2000. Even though Mr Day considers that the spirit of the legislation has been observed, a number of basic procedural requirements of the Standard Module have not been complied with, including:

1.

Mr Cheung has provided a one-page document containing an agenda of ten items. Section 42 of the Standard Module provides that not only must the notice of a proposed general meeting contain the time, place and agenda of the meeting; it must also be accompanied by a proxy form, a voting paper, and explanatory or other materials. Given that a financial report was being presented to the meeting, then a copy of this report must be included in the notice of the meeting. Further, section 45(3) provides that the agenda for an annual general meeting must provide for a presentation of the accounts for the financial year, provide for the appointment of an auditor, provide for the approval of a budget, and the fixing of contributions to be paid by lot owners. It is clear that the notice of the Annual General Meeting was not in accordance with the provisions of the Standard Module.

2.

Issues such as leaking guttering, determining the financial year, the front garden arrangements, and the handling of sewerage repairs were raised at the meeting. Section 52(5) of the Standard Module provides that “A general meeting may pass a resolution on a motion only if the motion is—

(a) included as an item of business on the general meeting’s agenda; and
(b) stated in the voting papers accompanying the notice of the meeting.”

3.

A decision was made at the meeting to raise a levy of $700 per annum. Section 95 of the Standard Module provides that the contributions to be levied on each lot owner must be fixed based on the budgets for a financial year. An administrative fund budget and a sinking fund budget were not presented to the meeting for the approval of owners. The decision to raise a levy was not based on a budget and there is no reference to the allocation of this levy to a particular fund. I note that a decision was made to establish a sinking fund, which presumably had not existed.

It is clear that the above procedural legislative requirements for convening and holding an annual general meeting have not been complied with by the body corporate. I would point out that, in respect to meetings generally, the courts have consistently held that where there have been procedural errors or omissions in the calling of a meeting, or other lesser irregularities, the meeting and decisions made at the meeting should nevertheless be preserved unless it can be shown that there has been some fundamental disadvantage to voters (owners).

For the following reasons, I consider that the lot owners have not been disadvantaged by the errors or omissions in calling and holding the AGM dated 18 January 2000:

1.	The owners of each of the four lots in the scheme were represented at the meeting. Therefore, all owners or their representatives had knowledge of, and input into the decisions made at the meeting.
2.	There is a record of the voting on eleven of the twelve decisions made at the meeting. Nine of the decisions were resolved with three of the four lots voting in favour of the issue before the meeting. The minutes indicate that all voters voted for the issues relating to the financial year and water rates. With the exception of the election of committee members, each of the issues considered at the meeting required ordinary resolutions. Given that the decisions made at the AGM dealt primarily with normal management issues, and did not prejudice a particular lot owner, I consider that the results of voting at the meeting should be preserved.
3.	Even though there were obvious procedural discrepancies with the convening and holding of the AGM, the body corporate did consider and decide on the statutory agenda items relating to the financial statements and the fixing of contributions to be levied on owners. The body corporate’s motivation to comply with the legislation is also evident by the decision to establish the mandatory sinking fund.

Another significant consideration is that the disputed AGM was held on 18 January 2000. There was a delay of some three months before Mr Cheung lodged this application, which can be attributed to some extent to his unsuccessful requests to the secretary to reconvene the AGM. However, the fact remains that the applicant is seeking to invalidate a meeting which was held over seven months ago. The time which has lapsed since the January 2000 AGM is an important consideration, especially given that the decisions made at the AGM did not prejudice any particular lot owner, related to the management and administration of the body corporate, and more than likely have been implemented. Further, I have noted that the body corporate made a decision at the AGM to hold the next AGM before 30 November 2000, a decision that the minutes indicate the applicant supported. The effect of this decision is that the body corporate has decided to hold its next AGM within the next three months. I consider that it would be pointless convening another meeting before this time, and do not see any reason to interfere with the body corporate decision to change the financial year. However, the consent of the body corporate to change its financial year will only take effect when that decision is confirmed by an order of an adjudicator under section 229 of the Act.

For these reasons, I have dismissed the order sought by Mr Cheung and ordered that the financial year for this body corporate be changed to end on 31 October each year. This order will allow the body corporate to hold its next AGM as decided at the AGM held on 18 January 2000. While the body corporate decided that the AGM be held not later than 30 November, it should be aware that section 60 of the Standard Module provides that an annual general meeting must be held within three months of the end of the financial year.

While I have dismissed the order sought on this occasion, the body corporate (of which each lot owner is a member) and its committee, must recognize the obligation to comply fully with the provisions of Act and the Standard Module, and not just merely observe the spirit of the legislation. Therefore, the committee must ensure that the next AGM is held in accordance with the legislation. If Mr Day is still the sole committee member, he should take note of section 25(3) of the Standard Module regarding filling the committee vacancies. All lot owners should also be aware that the body corporate has an obligation to act reasonably and for the benefit of lot owners, and it must ensure that the requirements of the legislation are complied with, even if there is some conflict between lot owners or their representatives.