Aussie Resort [2001] QBCCMCmr 449 (14 August 2001)

P J HANLYREFERENCE: 0287-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	8799
Name of Scheme:	Aussie Resort
Address of Scheme:	1917-1921 Gold Coast Highway BURLEIGH HEADS QLD 4220

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

Lorna Merle Graham , the co-owner of lot 51



I hereby order that the deed of consent to security dated 9 June 2000 was validly entered into between the National Australia Bank Limited, the body corporate for Aussie Resort CTS 8799 and Ernst Ulrich Mack, and remains valid notwithstanding that the Standard Module now regulates the scheme.

I further order that motion 14 considered by the body corporate at the annual general meeting held on 26 April 2001 was validly carried.

I further order that the application for an order that motion 13 considered by the body corporate at the annual general meeting held on 26 April 2001 be carried in favour of an independent intercommunication service for all lot owners of the Aussie Resort for health, security, safety and to comply with building regulations and insurance policy standards, is dismissed.




STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0287-2001

“Aussie Resort ” CTS 8799

The applicant, Lorna Merle Graham, the co-owner of lot 51, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

•	That an order be issued to determine the legality and the validity of the Deed of Consent to Security between the National Bank, the body corporate of the Aussie Resort CTD 8799 and Ernst Ulrich Mack (owner lot and the building manager).
•	That an order be issued to determine the legality and the validity of motion 14 of the AGM proposed by E.U. Mack for an amendment to the Management Agreement pursuant to current management regarding remuneration increases.
•	That an order be issued to have motion 13 of the AGM held 26/04/01 be carried in favour of an independent intercommunication service for all lot owners of the Aussie Resort for health, security, safety and to comply with building regulations and insurance policy standards.

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 deed of consent to security dated 9 June 2000 was registered under the Accommodation Module and still is, in spite of the fact that the module was changed back to the Standard Module on 12 January 2001. The applicant further states that the committee appears to be in breach of section 55(3)(b) of the Act. The applicant further states that motion 14 considered by the body corporate at the annual general meeting held on 26 April 2001 was proposed by the resident manager and not approved or proposed by the committee. The applicant is concerned that this might be a breach of the management agreement. She is also concerned that it is a private motion for pecuniary gain, which has not been budgeted for, and which will again force up the levies. In addition, the applicant is concerned that if motion 14 is allowed to stand, then the resident manager will be able to seek an increase in his management fees at any time, and the agreement will not be enforceable. The applicant also noted that the increase in the management fee was only supported by a small percentage of the owners, and the vote was very close.
Finally, the applicant analysed the voting pattern for the motions dealing with intercommunication at the scheme, and concluded that as motion 13 was only narrowly defeated, it should be deemed to have been carried for health, security, safety and to comply with building regulations and insurance policy standards pursuant to section 113(a)(c) of the Standard Module.

The body corporate committee and the resident manager were invited to respond to the application.

The resident manager opposed the application, stating:

• The deed of consent to security was validly authorised by the body corporate at the annual general meeting held on 17 April 2000

• In any event, entering into such a deed is not a restricted issue

• As an owner he is entitled to submit motions for consideration by the body corporate in general meeting

• Owners have had the opportunity to vote on the motion increasing remuneration, and the motion was carried

• If any further variation were to be sought to the management agreement it would be a matter for owners at the time to follow proper voting procedure and agree or otherwise to the variation sought

• Any owner is entitled to call for a poll vote

• The issue of intercom services is presently being pursued by the committee to the benefit of all owners

The body corporate manager opposed the application for the following reasons:

• The body corporate was authorised to enter into the deed of consent to security at the annual general meeting held on 17 April 2000

• Any application challenging the validity of that authorisation should have been lodged within 3 months of the meeting at which authorisation was given (section 193(1)(b) and (2)(b) of the Act)

• The deed of consent to security is a standard deed and is in place of a previous deed approved when the management rights were first approved.

• Although the transfer to the Accommodation Module was approved at the annual general meeting held on 17 April 2000, the transfer was reversed by an adjudicator’s order in Application 0326-2000, and the management and letting agreement reverted to 10-year agreements in accordance with sections 80 and 81 of the Standard Module.

• The motion to amend the management agreement was a valid motion submitted by an owner in compliance with section 41(2) of the Standard Module. The motion was subsequently carried.

• The motion to install an independent intercommunication system was lost by a narrow margin, and has now been referred to the committee for further discussion.

I have perused the deed of consent to security dated 9 June 2000 entered into between the National Australia Bank Limited, the body corporate for Aussie Resort and Ernst Ulrich Mack. The deed makes no reference to any particular module, but states that the reason for its existence is that the body corporate has appointed the manager under the terms of the management agreement; the bank has agreed to loan money to the manager and is taking security over the management agreement; the bank has asked the body corporate to consent to the security so that the bank’s rights under the security can be enforced on a default and the bank is given the opportunity to preserve the management agreement and so protect its security.

The deed of consent to security was validly authorised by the body corporate on 17 April 2000. The document relates to the management agreement, whatever the term of the management agreement may be. It is not necessary for the body corporate to enter into a fresh deed simply because the term of the management agreement has now been limited to 10 years by virtue of the order made in application 0327-2000. The deed does not purport to, and cannot, give the management agreement a longer term than permitted under the Standard Module. I am satisfied that the deed is valid.

The applicant has taken issue with the fact that the resident manager proposed motion 14, seeking to amend the management agreement. The resident manager is an owner, and is entitled to propose a motion for consideration by the body corporate. The motion was considered at a validly convened meeting. All owners had the opportunity to vote. There is nothing in the management agreement to prevent the resident manager from seeking to have his remuneration increased. It is a matter for owners, exercising their democratic rights, to determine that issue. In this instance, although the voting was extremely close, the motion was carried. The resident manager had 2 lot entitlements, and was entitled to call for a poll vote on an ordinary resolution. The applicant’s concern that the management agreement might in some way become unenforceable because motion 14 was carried is unfounded. The other terms of the management agreement remain in force. The applicant is also concerned that the increase in management fees, which has not been budgeted for, will lead to an increase in levies. If owners vote for expenditure for which an allowance has not been made in the budget, then owners are required, by ordinary resolution, to fix a special contribution towards the expenditure, as provided for in section 95(2) of the Standard Module. Once again, whilst this situation might not be desirable, it is for owners to exercise their democratic rights in relation to it. It is not relevant that a large number of lots did not support the increase in the resident manager’s remuneration. What is relevant is that all owners had the opportunity to exercise a vote in relation to the matter. If they did not do so, then it is too late to lament after the event. I am satisfied that motion 14 was validly proposed, and carried, at the annual general meeting held on 26 April 2001.

Finally, in relation to motion 13, I do not propose to overturn the vote, and deem the motion as carried. The motion was defeated, and is now being further considered by the committee. I am aware of the long history of disputation in relation to the intercom system within this scheme. There were 4 motions relating to the intercom system considered by owners at the annual general meeting held on 26 April 2001. All 4 motions were lost. It is obvious that owners do not have a clear idea of the type of intercom system they want in place at the scheme. I consider, therefore, that it is appropriate for the matter to be further considered by the committee, so that a proposal, which might gain owners’ approval, can be put forward. Any proposal will have to be considered by owners at a general meeting, so the applicant, and any other like-minded owners, will have a further opportunity to register their votes.