19 Maryvale Street [2001] QBCCMCmr 399 (20 July 2001)

P J HANLYREFERENCE: 0409-2001

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10427
Name of Scheme:	19 Maryvale Street
Address of Scheme:	19 Maryvale Street TOOWONG QLD 4066

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

Mr Michael David Hobson, the Owner of lot 6



I hereby order that the annual general meeting of the body corporate purportedly held on 7 June 2001 was at all times void.

I further order that any purported contract between Strata Care Australia Pty Ltd and the body corporate for “19 Maryvale Street” arising from the annual general meeting purportedly held on 7 June 2001 was void ab initio.2n

I further order that within fourteen (14) days of the date of this order Strata Care Australia Pty Ltd shall hand all books and records of the body corporate, entered up to date, to Body Corporate Services Pty Ltd.

I further order that –

(1)	Body Corporate Services Pty Ltd of PO Box 466, Toowong Qld 4066 is appointed as administrator to call, hold and chair an annual general meeting (“the meeting”) of “19 Maryvale Street” within three (3) months of the date of this order for the purpose of -
•	the consideration of motions included on the agenda of the meeting; and
•	the election of committee members.

(2)	The administrator shall hold the appointment for the period beginning from the date of this order until of the close of the meeting ordered.

I further order that within seven (7) days of the date on which it receives the books and records of the body corporate from Strata Care Australia Pty Ltd the administrator must give a copy of this order to each person whose name appears on the roll as the owner of a lot in the scheme (“lot owners”).

I further order that –

(1)	For the purpose of calling, holding and chairing the meeting, the administrator shall have all the powers of the chairperson, secretary and treasurer of the body corporate, and of the committee, with the exception of the following powers -
•	to further delegate any of those powers to another person; or
•	to incur any expenditure apart from that necessary for the calling and holding of the meeting, except in regard to expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the legislation.

(2)	The nomination and election procedures for the election of committee members shall be in the same manner as provided for in sections 14 and 15 of the Body Corporate and Community Management (Standard Module) Regulation 1997.

(3)	The administrator must give at least fourteen (14) days written notice inviting owners to submit motions for inclusion on the agenda of the meeting.

(4)	The meeting shall be otherwise called and held as an annual general meeting in accordance with the Act, particularly sections 42 and 45 of the Standard Module and all other provisions relating to meetings under Part 4 of the Standard Module.

(5)	The administrator must not give the notice of meeting to owners earlier than twenty-one (21) days from the date of this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0409-2001

“19 Maryvale Street” CMS 10427

The applicant, Michael David Hobson, the owner of lot 6, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1. That the meeting of the body corporate purportedly held on 7 June 2001 be declared void due to irregularity.

2. That the body corporate not enter into a contract with Strata Care Australia Pty Ltd for the provision of management/administrative services and that any purported contract between the parties be declared void ab initio.

3. That Strata Care Australia Pty Ltd refund to the body corporate any fees paid to Strata Care Australia Pty Ltd as body corporate manager under any contract which is determined by the adjudicator to be void.

4. That Strata Care Australia Pty Ltd provide a detailed account of all expenditure incurred by them on behalf of the body corporate (including details of proper authorisation for such expenditure) since the previous annual general meeting of the body corporate held on 22 February 2000.

5. That Strata Care Australia Pty Ltd pay compensation to the body corporate for any unauthorised expenditure incurred by Strata Care Australia Pty Ltd or any other expenditure determined by the adjudicator to be unreasonable or otherwise in breach of the Act.

6. That Strata Care Australia Pty Ltd forthwith deliver the books, accounts, records and seal of the body corporate to Body Corporate Services Pty Ltd.

7. That Strata Care Australia Pty Ltd forthwith close any bank accounts held in the name of the body corporate and deliver any funds held in such accounts to Body Corporate Services Pty Ltd to be held on trust by Body Corporate Services Pty Ltd pending the appointment of a new manager/administrator of the body corporate.

8. That Body Corporate Services Pty Ltd be authorised to call an extraordinary general meeting of the body corporate for the purpose of considering the appointment of Body Corporate Services Pty Ltd as body corporate manager/administrator.

The applicant has also sought an interim order of an adjudicator in similar terms.

Section 225(1) of the Act 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)).

In the supporting grounds, the applicant states that the secretary/body corporate manager has not complied with the Act, which is detrimental to the maintenance of the property and has an adverse effect on owners’ properties. The applicant further states that the body corporate is paying for a service which is not provided. The applicant further states that the secretary was requested to hand over books and records to another body corporate manager in mid-May 2001, but has failed to do so. The applicant also provides copies of relevant correspondence.

The secretary/body corporate manager was invited to respond to the application. The secretary provided some historical background, and concluded the submission as follows:

“Owners are entitled to request an extraordinary general meeting under regulation 61 of the Body Corporate and Community Management Act 1997 Standard Module, however the request also stated that Strata Care Australia Pty Ltd were to provide the books and records of the body corporate to Body Corporate Services prior to the extraordinary general meeting, which we are unable to do until Body Corporate Services have been appointed as body corporate managers and have the authority to collect the books and records of the body corporate.”

I have also been provided with the minutes of the adjourned annual general meeting held on 7 June 2001. I note that the meeting was originally scheduled to be held on 31 May 2001, but was adjourned for 7 days, under section 48(3) of the Standard Module, when there was no quorum present within 30 minutes of the time scheduled for the meeting to commence. At the adjourned meeting, the only person present was the body corporate manager. There were no voting papers received from any owner. The applicant seeks an order that the meeting be declared void due to irregularity, on the basis that owners were not invited to submit motions for consideration at the annual general meeting, nor were they invited to submit nominations for committee positions. The body corporate manager does not deny this allegation, although I note from the historical background that the body corporate manager refers to notices inviting motions for the annual general meeting having been sent out on 21 June 2000, almost 11 months earlier. The body corporate manager explains that the annual general meeting was not held at that time because the then majority owner requested that the meeting be delayed until that owner had disposed of its holdings.

Section 13 of the Standard Module provides as follows:
ú

Nominations to committee

13.(1) This section states how individuals are nominated for election

(other than an election held at the first annual general meeting for the

scheme) as chairperson, secretary, treasurer or ordinary member of the

committee.

(2) The secretary must serve notice on each owner shown on the body

corporate’s roll, inviting each lot owner—

(a) if the lot owner is an individual—to nominate the lot owner or

another individual for election as a member of the committee; and

(b) if the lot owner is not an individual—to nominate an individual

for election as a member of the committee.

(3) The notice must be given at least 3 weeks before, but not earlier than

6 weeks before, the end of the body corporate’s financial year.7

(4) Nominations must be given to the secretary by the end of the body

corporate’s financial year.

(5) A nomination must be given in the form of a written notice and—

(a) if the nomination is from a lot owner nominating the lot

owner—must be signed and dated by the lot owner; or

(b) if the nomination is from a lot owner nominating an individual

other than the lot owner—

(i) must be signed and dated by the individual; and

(ii) must be countersigned by the lot owner, or a person acting

under the authority of the lot owner; and

(iii) must state the lot owner’s lot number.

(6) A nomination must contain the following—

(a) the surname and either the first given name or other name or

abbreviation by which the nominated person (the “candidate”) is

generally known;

(b) the position or positions the candidate is nominating for;

(c) if the nomination is for secretary or treasurer—

(i) whether the candidate is the owner of a lot; and

(ii) if the candidate is not the owner of a lot but is nominated

because of the candidate’s duties as the employee of, or

provider of services to, another person—the other person’s

name.

(7) As soon as practicable after receiving a nomination under this section,

the secretary must forward written notice to the candidate acknowledging

that the nomination has been received.

Section 41 of the Standard Module provides as follows:

Opportunity to submit agenda motions

41.(1) A member of the body corporate may at any time submit a

motion for consideration at a general meeting of the body corporate and, if a

motion is submitted, including in response to an invitation under

subsection (3), it must, subject to subsection (2), be included on the next

general meeting agenda on which it is practicable to include the motion.

(2) A motion may be included on the agenda for an annual general

meeting only if the secretary receives the motion before the end of the body

corporate’s financial year immediately preceding the meeting.

(3) If notice is forwarded to members of the body corporate inviting

nominations for committee member positions to be filled at an annual

general meeting of the body corporate, the members must also be invited to

submit motions for inclusion on the agenda for the meeting.

It is unclear as to whether the body corporate manager believes that the notice sent out to owners on 21 June 2000 satisfies the requirements of sections 13 and 41 of the Standard Module in relation to the meeting which was held on 7 June 2001. In any event, it does not, not least because 9 of the 10 lots had changed ownership in the intervening period. Furthermore, the meeting held on 7 June 2001, whilst satisfying section 48(4) of the Standard Module as far as establishing that a quorum was present, was in all other respects a non-event, since not one voting paper was received. The body corporate manager appears to have proceeded with the meeting under the misapprehension that his presence not only established a quorum, but also gave him the right to vote. This is incorrect. A voter is defined in section 49 of the Standard Module and the manner of exercising votes is prescribed in sections 51 and 52 of the Standard Module. A body corporate manager is precluded from voting by proxy, under section 75(2) of the Standard Module, although the body corporate manager has not purported to vote in this manner in any event. The minutes record that all motions were carried, except motion 4, which lapsed because motion 3 was carried. This is also incorrect. Every motion listed on the agenda of the meeting should have been shown as having lapsed, in the absence of any vote being recorded. Apart from any other consideration, I am most surprised that the body corporate manager would have thought it appropriate to vote in favour of his own re-appointment after having received letters from owners requesting that the books and records be handed over to another management company because owners were unhappy with his performance.

I therefore propose to make orders 1 and 2 as sought by the applicant.

I am unable to make orders 3-5 as sought by the applicant, as section 182 of the Act does not allow for an application to be made by an owner against a body corporate manager. Such an application can only be made by the body corporate. However, if Strata Care Australia Pty Ltd has paid itself any management fees under the purported engagement from the annual general meeting held on 7 June 2001, then in light of my orders above, there would obviously be a requirement that those fees be refunded to the body corporate. I certainly would not expect that the body corporate would have to take further action in this regard. As to order 4, there is no evidence that Strata Care Australia Pty Ltd has been requested to provide a detailed account of expenditure incurred by it on behalf of the body corporate, and until such time as that request is made, and refused, there is no evidence of a dispute. Not only would I not expect the request to be refused, I would also expect that the required information would be apparent when the books and records are handed over to Body Corporate Services.

As to the order seeking hand-over of books and records, I propose to make such an order, because I have been provided with copies of owners’ authorizations from 9 of the 10 lot owners requesting that Body Corporate Services be authorized to call an extraordinary general meeting. In order for Body Corporate Services to call a meeting it obviously must have the books and records of the body corporate. I am once again surprised that Strata Care Australia Pty Ltd did not see fit to hand over the books and records when requested in writing to do so by one of the owners, the present applicant, who relied upon the owners’ authorizations, which had been supplied to Strata Care Australia Pty Ltd, in making his request. The books and records of the body corporate are the property of the body corporate, which of course comprises all of the owners. The owners can legitimately direct a body corporate manager as to the delivery of books and records, particularly when a body corporate manager’s contract has expired. It is not necessary for another body corporate manager to have been appointed in order for books and records to be handed over. Evidence of such an appointment would of course be necessary if a body corporate manager were to unilaterally request books and records from another body corporate manager, without the support of owners’ authorizations, but that was not the case here.

I also propose to make an order authorizing Body Corporate Services to call a meeting as required by the owners. I consider that this meeting should take the form of an annual general meeting, in light of my order above to invalidate the purported annual general meeting held on 7 June 2001. Body Corporate Services has consented in writing to the appointment as administrator for the purpose of calling and holding the meeting.

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 parties consider that an appeal of this decision is warranted, then they should appeal the interim order.