Culgoa Point [2001] QBCCMCmr 169 (22 March 2001)

RA MeekREFERENCE: 0535-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11106
Name of Scheme:	Culgoa Point
Address of Scheme:	Culgoa Beach Resort Quamby Place NOOSA HEADS QLD 4567

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

Peter Charles Morrison and Vicki Ann Morrison, the owners of lot 30



RA MeekI hereby order that the application by Peter Charles Morrison and Vicki Ann Morrison, the owners of lot 30, for orders that -

1. That resolution No. 11 passed at the AGM of Culgoa Point body corporate on the 26^th August 2000 be declared void and / or invalid.

2. That the election of the chairperson, secretary and committee held at the AGM of the Culgoa Point body corporate on the 26^th August 2000 be declared void and / or invalid

is dismissed.

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STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0535-2000

“Culgoa Point” CTS 11106

The applicants Peter Charles Morrison and Vicki Ann Morrison, the owners of lot 30, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1.	That resolution No. 11 passed at the AGM of Culgoa Point body corporate on the 26th August 2000 be declared void and / or invalid.
2.	That the election of the chairperson, secretary and committee held at the AGM of the Culgoa Point body corporate on the 26th August 2000 be declared void and / or invalid.

Section 223(1) 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 applicants state that, in respect of the first order sought by them –

The resolution is in breach of regulation 104 in that the amount referred to in the motion exceeds the amount for major spending for the complex and two quotes for the services were not obtained.

No quotes whatsoever were supplied to lot owners. The chairman admitted at the meeting that regulation 104 applied to the motion but for convenience the committee had not bothered to obtain quotations.

The form of engagement as referred to in motion 11 was not forwarded with the notice of meeting / agenda and was not available at the meeting for perusal by lot owners. Accordingly, lot owners could not ascertain whether or not the form of engagement complied with regulation 78 of the standard module regulations.

In respect of the second order sought by the applicants, the applicants state -

The election ... was supposed to be by secret ballot. The election was held in breach of regulation 16 ... for the following reasons:-

a) Votes case by facsimile were wrongly included in the ballot;

b) Votes were counted that did not comply with regulation 16(7)(c);

c) Votes were counted that did not comply with regulation 16(7)(d);

d) Votes were counted that did not comply with regulation 16(7)(e);

e) Votes that should have been counted were wrongly rejected.

f) Mr Dan Philpot (... body corporate manager) counted the votes. In consideration of the chairman, Mr Jarrett not requiring 2 quotes for resolution no. 11, Mr Philpot purposely counted votes that should not have been counted and rejected votes that should have been counted to ensure the re-election of Mr Jarrett as well as the election of Mr Coppock as Secretary.

Submissions were sought in response to the application. In submissions, several parties noted the applicant’s lack of specific detail regarding their allegations. One respondent suggested that I request from Mr Morrison “full and complete details of any evidence that he has in his possession to justify the claims now made” and that in the absence of such evidence being forthcoming, that the second order sought “should be dismissed”.

I did agree that the applicant’s grounds lacked substantiation, particularly in respect of the second of the orders sought. I wrote to the applicants requesting “specific detail or substantiation of the allegation, including which particular votes were the subject of the particular allegation made”. The applicants responded that –

We note firstly that under section 192 of the Act we must state in details the grounds on which the order is sought. It does not state that we must produce the necessary evidence as this evidence could easily be obtained by you if you fully investigated the application, as you should as required by the Act.

I disagree with the applicant’s interpretation of section 192, and in particular the evidentiary requirement it places on an applicant. Section 192(1)(e) provides that an application “must state in detail the grounds on which the order is sought”. Moreover, natural justice requires that an applicant disclose the evidence on which they intend to rely, such that a respondent to the application might know the case against them and be allowed to respond to it.

The applicants did provide the following further information in response to my request for substantiation of their allegations –

As you are no doubt aware the election was held by means of a Secret Ballot. Under the Act you can have full access to all the voting papers, particulars envelopes and other voting records etc. etc. We cannot legally have such access. At the conclusion of the meeting as previously stated one of the scrutineers advised us that he was most dissatisfied at the way in which the election was held including the inclusion of votes cast by facsimile in clear breach of the Act, votes included that should not have been included and votes that should have been included but were not included. We repeat it was a Secret Ballot and therefore the scrutineers felt that he could not disclose to us which of the individual votes were involved. However it would be easy for you to ascertain (if you investigate the records which you should) which of the votes were cast by facsimile and which of the votes complied with the Act and which didn’t.

In their response, the applicants have twice referred to my duty to investigate the application. I am fully aware of my duty to investigate the application. The question does arise however, in the context of my duty to investigate, whether it also my duty to actively seek evidence which would substantiate the applicant’s allegations. In Tully v. The Proprietors The Nelson Body Corporate, an appeal of an order made by an adjudicator, in response to a submission by the appellant that the adjudicator had failed to investigate as required by section 220(1), Judge Robin of the District Court commented –

In my opinion, under s. 220 and s.221 it is for an adjudicator to determine what ought to be done by way of investigation and there is no error of law by an adjudicator who determines that the evidence available is insufficient to justify a necessary conclusion and does not actively seek further evidence to support the application.

I intend to be guided by this principle in my investigation of this matter.

One further allegation of the applicants which I do consider requires a response is the following statement made by the applicants, in their letter to me of 11 January 2001 –

We note that you have not had any discussions with us which under the Act you can do, but we fully understand that you have had discussions with Mr Jarret, Mr Philpot and Mr Coppock and this would clearly raise an apprehension of bias on your part.

I have never had a discussion in any form (written or oral) with Mr Jarret and Mr Coppock, and at the time of the applicant’s letter, with Mr Philpot also. I have since this time had discussions with Mr Philpot relative to arranging to inspect the books and records of this body corporate, and at the physical inspection of such records. Such discussions were necessary and proper in the context of my investigation of this application. The applicant’s apprehension of bias on my part is rejected. There is no basis whatsoever to support the allegation.

In respect of the first order sought, the applicants allege that section 104 has not been complied with “in that the amount referred to in the Motion exceeds the amount for major spending for the complex and two quotes for the services were not obtained”.

Relevantly, section 104 of the standard module provides –



ú
Quotes for major spending
104.(1) This section applies if—
(a) a motion to be moved at a general meeting of the body corporate proposes the carrying out of work or the acquisition of personal property or services, including the engagement of a body
corporate manager or service contractor, but not including the engagement of a service contractor who also is, or is to be, a letting agent; and
(b) the cost of carrying the proposal into effect is more than the relevant limit for major spending for the scheme.
(2) The lot owners must be given copies of at least 2 quotations for carrying out the work or supplying the personal property or services.
(3) If the motion is proposed by the committee, the committee must obtain the quotations. ...

The submission on behalf of the committee of the body corporate states that –

There are 65 lots in the Scheme. Accordingly, the relevant limit for major spending, as defined in the Standard Module, is $13000.00. The Body Corporate, under Resolution 11, has agreed to engage the body corporate manager for a term of one year at a cost of $10,000.00 ... . As this is below the relevant limit for major spending two quotes were unnecessary.

The committee submission then goes on to surmise that the applicants were including two options of one year each contained in the agreement in determining that the cost of the proposed services exceeded the limit for major spending.

In their reply to the submissions however the applicants explain the basis of their objection as follows –

The amount paid to the body corporate manager in fact exceeds the sum of $13000.00 by virtue of the monies paid to him pursuant to section 4.2 of the Agreement, being schedule 2 fees. These expenses we believe are shown in the budget under “meeting expenses and / or rates and charges” which are over $40,000.00.

Clause 4.2 of the proposed agreement relevantly provides –

The body corporate will pay to the manager additional fees in respect of work requested by the body corporate additional to that set out in the Second Schedule. ...

It is perfectly legitimate in my view for the form of engagement of a body corporate manager to include a provision akin to clause 4.2. If any such “additional fees” do arise for work approved by the body corporate, then payment to the manager can be made subject to the statutory limits for approval of expenditure (ie. committee up to $100 per lot / thereafter body corporate in general meeting). Moreover, there is no basis on which the line item references in the proposed annual budget to “Meeting expenses”, of which there are three (committee travel / $7000 // provision / nil // general / $500), or “Rates and Charges” for which a $30,000 provision is made, could be said to be referable to the appointment of the manager, as alleged by the applicants. The applicant’s allegation in this regard is not substantiated.

I consider that section 104 of the standard module was complied with in respect of motion 11 carried at the AGM of the body corporate held on 26 August 2000, and that the applicant’s objection to the validity of this resolution should be dismissed.

The applicants further allege that the form of engagement as referred to in motion 11 was not forwarded with the notice of meeting / agenda and was not available at the meeting for perusal by lot owners. The copy of the notice of meeting provided to me does include, as part of the notice of meeting of the AGM, a copy of the “Administration Agreement” proposed to be entered into with the manager. This allegation doesn’t warrant further investigation.

The second of the orders sought by the applicants relates to the election of the committee excepting the treasurer. The applicants allege contraventions of section 16(7) of the standard module. That sub-section provides –

(7) To vote, a person must—
(a) for a ballot for the position of chairperson, secretary or treasurer—place a mark in the space opposite the name of the candidate the person wishes to vote for; and
(b) for the ballot for the ordinary member positions—place a mark in each of the spaces opposite the names of however many candidates the person wishes to vote for; and
(c) place the ballot-paper in the ballot-paper envelope supplied by the secretary and seal it; and
(d) if a separate particulars envelope is supplied—place the sealed ballot-paper envelope in the separate envelope and seal it; and
(e) complete the separate particulars envelope or particulars tab by signing and dating the envelope or tab, and inserting the following information on, the envelope or tab—
(i) the number of the lot for which the vote is exercised;
(ii) the name of the owner of the lot;
(iii) the name of the person having the right to vote;
(iv) the basis on which the person has the right to vote; and
(f) give the completed particulars envelope with the ballot-paper envelope enclosed, or the ballot-paper envelope with the completed particulars tab attached, to the secretary, or forward the
envelope to the secretary so that the secretary receives it, before or at the annual general meeting.

The applicants allege that votes cast by facsimile were wrongly included in the ballot.

The body corporate’s submission states that –

In relation to the facsimile votes, Mr Philpot advised several owners and the scrutineers that he had previously encountered where votes were submitted by facsimile. He advised that he had contacted the office of the Commissioner for Body Corporate to clarify the situation. Verbal advice was provided to Mr Philpot that these facsimile votes should be included as long as voting papers and particulars envelopes in the correct form were subsequently received.

An adjudicator is not bound by any information a caller to the Information Service alleges that he or she has received. I consider that practically though, common sense would indicate that the information alleged to have been received could not have been correct. The requirements of section 16(7)(c to e) preclude such an interpretation. The receipt of ballot papers by facsimile means that these requirements cannot be met. Consequently, ballot papers received by facsimile could not be included in the ballot count, irrespective of what procedures were subsequently adopted concerning their receipt.

The body corporate submission then goes on to indicate how the votes received (and accepted) by facsimile affected the outcome of the count. It concludes –

If the facsimile votes were not included the only position that may have been effected would be that of the secretary. The remaining positions would still have been elected by clear margins by the position of secretary would have needed to be decided by chance. In the circumstances it does not seem practical that a new general meeting be held simply to determine this issue, particularly as the votes are likely to be similar but this time will certainly be provided in the correct manner.

The applicants do not comment on this aspect in their reply to the submissions.

The applicants have made other allegations regarding the conduct of the committee election including “votes included that should not have been included and votes that should have been included but were not included”. In support of this allegation the applicants allege that “one of the scrutineers advised us that he was most dissatisfied at the way in which the election was held ...” and that “the scrutineer felt that he could not disclose to us which of the individual votes were involved.”

In order to establish the correctness of these allegations, I contacted both scrutineers, Mr Bruce Gobbett and Mr Jack Waring. Mr Waring stated that he had not spoken to the applicants regarding this matter. Mr Gobbett acknowledged that he had. I indicated to Mr Gobbett the applicant’s allegation regarding the statements alleged to have been made by him to the applicant. The response of Mr Gobbett certainly indicated to me that the applicants have significantly overstated or embellished what information was provided to them by Mr Gobbett. In respect of his alleged statements to the applicants, Mr Gobbett responded to the effect that he did not have sufficient knowledge regarding the voting / ballot procedure to make the statements he is alleged to have made.

The applicants further allege that Dan Philpot, the body corporate manager counted the votes and that in consideration of the chairman, Mr Jarrett not requiring 2 quotes for resolution no. 11, Mr Philpot purposely counted votes that should not have been counted and rejected votes that should have been counted to ensure the re-election of Mr Jarrett as well as the election of Mr Coppock as Secretary.

The applicants provide no evidence or substantiation in support of this allegation. The allegation is rejected by both the body corporate and the manager in their submissions. In my discussions with both scrutineers, I asked of them whether they believed that the manager had, in their opinion or observation, acted improperly in any way or had tried to influence the outcome of the ballot for the committee election. Both scrutineers emphatically rejected this suggestion to me, and were complementary of the role played by the manager in giving guidance to them in the procedure to be adopted for the count. This was so notwithstanding that one scrutineer now appreciated that the manager might in fact have given them technically wrong advice regarding the acceptance of the facsimile votes, and that the other was in fact detrimentally affected by a direction of the manager not to accept certain ballot envelopes because of a failure by the owners to correctly sign the ballot envelope.

In the circumstances, I am not prepared to investigate the applicant’s allegations regarding the conduct of the ballot further. I consider the allegations are unsubstantiated, and further, that the basis on which the applicants assert the accuracy of the allegations has been repudiated. In view of these unsubstantiated allegations, and the allegation of an apprehension of bias on my part, I conclude that the applicants have a clear propensity to make allegations which are not substantiated. Moreover, I conclude that the applicants are prepared to make allegations which are simply false, or not based on any reasonable belief.

I return to the one aspect of the vote which has been established by this application; namely that the vote for secretary was tied. In the event of a tied vote, the standard module requires that the outcome be determined by chance in the way the meeting decides (see section 21(4)).

In the circumstances, I do not intend to order that a fresh election for the position of secretary be held. This would be an expensive imposition on the body corporate for no significant benefit, particularly in view of the fact that it would take the better part of two months to seek nominations and call the meeting, and then the relatively short period before the next AGM. This decision not to order a fresh election for the position of secretary is no reflection on Mr Currie, the unsuccessful nominee for the position.


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