Grand Mariner [2001] QBCCMCmr 3 (5 January 2001)

P G DanielsREFERENCE: 0007-2001

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	4264
Name of Scheme:	Grand Mariner
Address of Scheme:	12 Commodore Drive SURFERS PARADISE QLD 4217

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

Michael Issakidis a co-owner of lot 154



P G DanielsI hereby order that the application for the following orders:

(a)	That Resolution 5 of Resolutions Passed Outside a Committee Meeting of Grand Mariner, CTS 4264 dated 22/12/00 which states as follows: ......... be declared invalid;
(b)	That the distribution of the Resolution 5 to the owners be withheld by the Body Corporate Manager;
(c)	That the Committee Members Statement not be enclosed with the Notice and associated papers of the Annual General Meeting of the Body Corporate to be held on 31/01/01.

is dismissed.1n

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0007-2001

“Grand Mariner” CMS 4264

The applicant, Michael Issakidis, a co-owner of lot 154, has sought the following interim and final orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):

(d)	That Resolution 5 of Resolutions Passed Outside a Committee Meeting of Grand Mariner, CTS 4264 dated 22/12/00 which states as follows: ......... be declared invalid;
(e)	That the distribution of the Resolution 5 to the owners be withheld by the Body Corporate Manager;
(f)	That the Committee Members Statement not be enclosed with the Notice and associated papers of the Annual General Meeting of the Body Corporate to be held on 31/01/01.

Section 197(4) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

This is an application requiring urgent attention as it is intended to forward the notice of general meeting referred to in order (c) to owners on 5 January 2001. I have not sought submissions given the urgency.

The application relates to a resolution of the Committee to enclose an explanatory memorandum with a notice of an annual general meeting planned to be held on 31 January 2001. The background is as follows.

The body corporate has previously been involved in specialist adjudication pursuant to the Act with the owner of lot 124 MM Holdings Pty Ltd. The Body Corporate incurred substantial legal fees. The applicant indicates the fees amounted to approximately $85,000. The applicant indicates that there has been no Body Corporate approval for the expenditure. The applicant refers to section 103 of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Regulation).

The matter will be considered by the Body Corporate at its annual general meeting planned for 31 January 2001. There are two relevant motions which provide as follows:

“12.

Legal Fees And Associated Costs for Action Again Owner of Lot 124

That the Body Corporate ratifies legal and associated costs of up to $90,000 incurred or to be incurred by the Body Corporate in connection with the action against MM Holdings P/L the owner of Lot 124 relative to alterations to the lot.

Note to Motion: The Committee has resolved to seek ratification of legal costs incurred in this matter however it should be noted by owners that there is currently a notice of claim lodged with the Body Corporate insurers on the Office Bearers Liability cover for recovery of up to $85,000 for costs incurred, and a NO vote will defeat the insurance claim.

21.

Proposed by: Mr MJ Issakidis Lot No. 154

That the Body Corporate forthwith make a demand against Allan Johanson, David Armour, Michael Avery, John Parker, Bill Klassen, Graeme Meyer, Doug Knight, David Starbuck, Don Curson, being members of past Committees, for recovery of all the legal costs incurred by the Body Corporate in pursuing its actions against M & M Holdings such demand to be based on breaches of the Body Corporate and Community Management (Standard Module) Regulation 1997 and in particular but not limited to a breach of Regulation 103 which requires spending above the relevant limit for Committee to be authorized by Ordinary Resolution of the Body Corporate.

Explanatory Note to Motion:

The Office Bearers Liability and Legal Expenses Insurance covers members of Committee if a claim is made on them. In order for the Body Corporate to recover the legal costs not properly authorised this first step of the Body Corporate via Committee members must be taken and the member or members of the Committee can then claim on the Insurance Company under this policy. A Loss Assessor is then appointed by the Insurance Company at its cost to investigate and report on the claim. The Body Corporate takes out this insurance and pays the premium for the protection of itself and all members of Committee.”

The Committee’s motion, number 12, seeks to ratify the payment of the legal expenses.

The Committee passed the following resolution outside of a Committee meeting on 22 December 2000:

“That the Committee agrees to distribute the following statement to owners relating to the matter of the Body Corporate action against the owner of Lot 124 with the agenda and associated papers for the Annual General Meeting to be held on 31 January 2001.

Committee Members Statement re Matters Pertaining to Lot 124:- (dispute re major renovations)

Further to the matter of Lot 124, Grand Mariner vs MM holdings Pty Ltd, unsubstantiated allegations have been made by Mr Michael Issakidis against a number of involved parties including more recently, Shand Taylor, solicitors, for the Body Corporate.

This has resulted in Shand Taylor advising the Body Corporate on 30 November 2000 of the withdrawal of their services as solicitors for the Body Corporate in all matters relating to this dispute citing a conflict of interest.

In light of these circumstances, those current members of the Committee against whom unsubstantiated allegations have been made, consider that they can no longer act on any aspect of the dispute with Lot 124 and that the matter should be dealt with by the entire Body Corporate at a general meeting.

Unfortunately, Mr Issakidis’s actions have served only to cause ongoing complications and delays in progressing the enforcement of the adjudicator’s orders against Lot 124 in relation to the waterproof membrane and improvements to the enclosed balconies.

The Committee have reluctantly been forced into taking this position by Mr Issakidis’s unsubstantiated and refuted claims which, in the opinion of the Committee members, are not in the best interests of the Body Corporate and will continue to incur substantial costs to all owners. RESOLVE that Motion 1 be Carried Yes - 2 No - 1 Abstain - 0.”

The applicant seeks the orders detailed above in respect of the Committee resolution on the basis that the Committee members who passed the resolution were in a conflict of interest. The applicant indicates that at a Committee meeting on 14 December 2000, Messrs Avery, Klassen and Meyer declined to take part in discussions and decisions about lot 124 due to a conflict of interest. A close reading of the minutes of that meeting shows that they temporarily left the meeting when matters pertaining to lot 124 were raised pending independent advice. It is not indicated that they left the meeting due to a conflict of interest.

The issue to be resolved is whether Meesrs Avery, Klassen and Meyer should not have voted on the resolution passed on 22 December 2000 due to a conflict of interest. I should state that I am accepting the evidence of the applicant that these persons did actually vote. I have not investigated that matter further because ultimately I have decided to dismiss the application.

Conflict of interest by Committee members is regulated by section 34(1) and (2) of the Regulation which provides:

Conflict of interest

34.(1) A member of the committee must disclose to a meeting of the

committee the member’s direct or indirect interest in an issue being

considered, or about to be considered, by the committee if the interest could

conflict with the appropriate performance of the member’s duties about the

consideration of the issue.

(2) A member required under subsection (1) to disclose an issue must

not, if the member is a voting member, vote on the issue.

I am unable to find a conflict of interest. The thrust of the statement is that some current members of the Committee “... consider they can no longer act on any aspect of the dispute with Lot 124 and that the matter should be dealt with by the entire Body Corporate at a general meeting.” The statement is also critical of Mr Issakidis. In my view, a conflict of interest does not exist because the Committee is making a statement in respect of something to be decided by the Body Corporate in general meeting. It is not the Committee making substantive decisions.

I have examined a further document provided by the applicant that is headed “Reasons for voting No to distribution of Statement”. The conflict of interest issue is raised. The applicant states in this document that the Committee is attempting to lie to owners about the expenditure on the legal fees. I am unable to accept that this is the case. The expenditure on legal fees is not even expressly mentioned in the statement to be forwarded to owners.

There is no basis on which to make the orders sought. I dismiss the application.

In the circumstances, it is not intended to invite further submissions regarding this matter, or to make a further order, since this decision, though an interim one as sought by the applicant, is final in its determination of this matter. If the applicant considers that an appeal of this decision is warranted, then he should appeal the interim order.