Aarons [2001] QBCCMCmr 615 (6 December 2001)

REFERENCE: 0606-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11476
Name of Scheme:	Aarons
Address of Scheme:	3355 Gold Coast Highway SURFERS PARADISE QLD 4217

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

Robert Charles James and Kathryn Margaret James, the owners of lot 1


I hereby order that motion 15 headed Body Corporate Manager and Motion 22 headed motion for alternative approach to rectification purportedly carried by the body corporate of Aarons at the general meeting held on 1^st October 2001, are invalid and of no effect.

I further order that, within seven (7) days of the date of this order, the secretary shall send a copy of this order and statement of reasons to all owners together with a notice inviting submission of motions for inclusion on the agenda of the meeting to be convened in accordance with the terms of this order (the meeting).

I further order that all owners shall have twenty-one (21) days from the date of this order to submit to the secretary motions for inclusion on the agenda of the meeting. All motions which are received by the secretary from owners within such time shall be included on the agenda of the meeting.

I further order that within twenty-eight (28) days from the date of this order, the body corporate secretary shall give notice to all owners in according with the Accommodation Module Regulation of a meeting to be convened and held to consider all motions included on the agenda in accordance with the terms of this order

I further order that fourteen (14) days notice of the meeting is to be given, and that in all other respects, proceedings at the meeting shall be in accordance with the Body Corporate and Community Management Act 1997 and the Accommodation Module Regulation.

I further order that the meeting might consider any other motion validly before it.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0606-2001

“Aarons” CTS 11476

The applicants Robert Charles James and Kathryn Margaret James, the owners of lot 1, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1.	That the EGM held on the 1st October 2001 be declared invalid and that any motions passed at that meeting be declared null and void.
2.	That pursuant to section 223 ... an administrator be appointed to perform the obligations of the body corporate and its committee under the said Act and pursuant to the community management statement.
3.	That the administrator forthwith implement the recommendation of Buildcheck as specified in their report dated the 4thJune 2001.
4.	In the alternative to paragraph 3 that the administrator satisfy all statutory notices issued regarding rectification of the building and all common property over which the body corporate has control in such a way as he deems necessary.

On 16 October 2001, I made the following interim order, quote –

RA MeekI hereby order that the body corporate shall not implement or otherwise act upon motions 15 headed body corporate manager or motion 22 headed motion for alternative approach to rectification purportedly carried at the EGM of the body corporate held on 1 October 2001 until as a final order to this application is made, this application is withdrawn, or this order is of no effect by operation of law.

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)).

The applicant seeks specific relief in respect of the EGM that was held on 1^st October 2001 (that it be declared invalid) and secondly, more general support for a position regarding certain aspects, namely building work recommended by Buildcheck, and the continued appointment of Gold Coast Body Corporate Specialists as body corporate managers.

After referring to “the need to deal with the urgent rectification matters” the applicants conclude their grounds with –

At the EGM the chairman ... informed people at the meeting that motions 2, 3, 4, 5, 6, 7, 8, 9, 10, 12 and 13 were not submitted by the committee and as such the chairman ruled that these motions were invalid and could not be voted on. These matters inter alia dealt with the body corporate attending to the necessary works to bring the building to a safe standard and in particular deal with the issues raised by the engineers report Buildcheck. As a result of these motions being declared invalid the EGM was left with a very small number of motions to be dealt with which did not include implementation of the Buildcheck recommendations. As such unit owners were not given the opportunity to be able to vote for the implementation of the recommendations made by Buildcheck. ...

It is our honest belief that unless the recommendations contained in the report of Buildcheck Pty Ltd are implemented, Queensland Fire and Safety Authority will seek court orders closing the building. We do not believe that the committee has acted appropriately and unit owners have not been given the opportunity to vote on the recommendations of Buildcheck which we believe are necessary for the proper rectification of the defects at Aarons.

If urgent action is not taken not only will the building be closed there is a high risk of personal injury to the occupant or visitor at the Aarons Building.

In the interim order, I stated as part of my reasons -

It seems to me that what the applicants are really seeking is a determination of the validity of the chairperson’s ruling, and if that ruling is determined to have been invalid, then a consequential order that the body corporate consider the motions ruled out of order.

As to the second of the interim order sought, to make such an order would commit the body corporate to a particular course of action. It is not the role of an adjudicator to require a body corporate to adopt a particular approach to any matter including rectification work, which would be a consequence of the making of such an order. Rather, it is for a body corporate in general meeting, following correct procedure, to determine how, for example, building rectification work should be undertaken, and by whom.

Finally I am asked to confirm the position of Gold Coast Body Corporate Specialists (GCBCS) pending the proposed appointment of an administrator. I note that GCBCS were the body corporate managers for the scheme. I say “were” as it seems that the body corporate resolved at the meeting to appoint Body Corporate Services Pty Ltd (BCS) (see motion 15). I note that this motion was submitted by the company nominee for lot 35 Mr G Pearsall.

A similar motion seeking to appoint GCBCS (motion 12) was one of the motions ruled out of order by the chairperson on the basis that it was not submitted by the committee. On this reasoning, one wonders why motion 15 was not similarly ruled out of order, having been submitted by a person other than the committee.

In the circumstances, I do intend to order that the body corporate shall not implement or otherwise act upon motion 15 until such time as a final order to this application is made. To this end, as the manager previously engaged, GCBCS such continue in that role. In this regard I have significant concerns regarding the fairness of a motion proceeding and being carried, when a seemingly equivalent motion is ruled out of order by a chairperson. I will consider this aspect further in my final order. I invite the body corporate to address this aspect in its submission in response to this application.

I have considered the content of the motions which were considered at the meeting. It seems to me that, excepting motion 15 which I have referred to above, the only other contentious motion is motion 22 which is headed motion for alternative approach to rectification at Aarons. Again, this motion was not submitted by the committee raising the same question which I posed above; namely should the motion similarly have been ruled out of order by the chairperson. Interestingly, the person submitting the motion in this instance was in fact the then chairperson. The motion provides that a grand scale rectification program is not undertaken at this time, but instead we use a program which is able to be paid for out of available funds. The motion then refers to expenditure marginally in excess of $100,000. The motion was purportedly carried by a vote of 25 “yes” to 9 “no” with one abstention.

It seems to me that this motion, though purportedly carried, is not capable of immediate implementation in any event. In particular, based on the draft minutes of meeting, the motion fails to comply with the requirements of section 104 which deals with “major spending” and requires a minimum of two quotes to be included with the motion. Consequently, it seems to me that the resolution, even if valid (and I will consider its validity in my final order) could be considered nothing more than an agreement in principle in any event.

In the circumstances, I intend to order that motion 22 of the meeting also not be implemented pending the final determination of this application. I consider that this order will at least preserve the status quo, pending the making of a final order. This does not prevent the body corporate from convening a final meeting to consider aspects associated with the proposed rectification work. However it is not my intention to prevent this.

The alternatives I as faced with in determining this dispute are at opposite ends of the spectrum. If the application is dismissed, and the body corporate is allowed to proceed to implement motion 22, then it seems to me that, notwithstanding that the motion was carried by 25 votes in favour to 9 against, the members of the body corporate will be required to accept a proposed solution to the problems which currently afflict this building, which on its face appears to me to be the low cost fix, thus avoiding the necessity to raise funds of $580,000 as the acceptance of the applicant’s alternative approach would require. Moreover, it is clear from the body corporate’s submission that in fact, all the members of the body corporate are being asked to do in voting in favour of motion 22 is to ratify certain decisions of the body corporate’s committee previously taken regarding rectification work to the building.

Alternatively, if I find that the applicants are entitled to succeed in the application, then really what is being proposed by them is that due to the urgency of the circumstances, I should not order that the motions ruled out of order be re-considered by the body corporate in general meeting (as I contemplated in my reasons for the interim order) but rather that I should bypass the meeting process and instead order the body corporate to implement repairs or maintenance works in the vicinity of $580,000. This approach was proposed to me by the applicant’s solicitor during the course of a teleconference on 8 November 2001.

These two alternatives are stark in contrast, In addition to the application, I now have the benefit of a submission in response from the body corporate, and further, a reply to that submission on behalf of the applicants. I conclude that the position of neither party’s is particularly meritorious, and I consider that the submissions of both are flawed in significant respects.

Both parties, but the applicant’s more so, seek that I accept their proposed solutions to the problems currently afflicting this building. I’m not prepared to enter into the debate of the right or wrong way to undertake the maintenance which this building undoubtedly requires. I reiterate my comments from my interim order, quote -

It is not the role of an adjudicator to require a body corporate to adopt a particular approach to any matter including rectification work, which would be a consequence of the making of such an order. Rather, it is for a body corporate in general meeting, following correct procedure, to determine how, for example, building rectification work should be undertaken, and by whom.

I now turn to the question of correct procedure as the basis for determining this application. The essence of the applicant’s submission is that its motions were incorrectly ruled out of order by the chairperson, thus preventing the members of the body corporate from having the opportunity to vote upon the proposals for rectification which the applicants obviously consider are the only way the rectification works might be undertaken.

In contrast, the body corporate submission is that the applicant’s motions were correctly ruled out of order by the chairperson, in that they were, for several technical reasons, not properly included on the agenda of the meeting in question. Moreover, the body corporate submission states that applicants did not seek to have the ruling overturn by the members present at the meeting. Given this, the body corporate considers that it is entitled to implement the terms of motion 22 and that “it will be able to rectify the problems at Aarons over the coming months in a way which is satisfactory to the members of the body corporate and which will comply with the statutory notices issued by the relevant bodies”.

The application does not deal specifically with the aspect disputed by the body corporate; that the motions were not correctly submitted for inclusion on the agenda. What the applicants state is –

Leading up to this EGM there was correspondence between Gold Coast Body Corporate Specialists and unit owners and the committee dealing with motions to be put to the meeting.

The motions which were later included on the agenda and ruled out of order by the chairperson originated in a document under the letterhead of Gold Coast Body Corporate Specialists (GCBCS) of 18 June 2001 headed “Notice to Committee Proposed motions in draft form for EGM to be submitted by committee”.

From what I can ascertain, the committee initially resolved to proceed with the appointment of “Buildcheck” (the applicant’s preferred choice) but at some stage during the next month or so, became equivocal about this approach, and when GCBCS sought to apply some pressure on the committee to the acceptance of the “Buildcheck” timetable, relations between the committee and GCBCS appear to have become estranged. I am not certain of the relationship or basis of arrangement which exists between the applicants and GCBCS, but it is clear that the latter has to some extent sought to impress on the committee the preferred position of the applicants regarding rectification works. One member of the committee has even suggested in a submission a familial relationship between the applicants and GCBCS, though this has not been established.

The committee states –

... at no time did the committee authorise the inclusion of those motions for consideration at general meeting by way of a resolution recorded in the minutes. The motions appear to have been submitted for consideration by the body corporate manager. The committee denies that the body corporate manager had authority to do so.

I consider that the applicants position is flawed in this respect. There is no evidence that they as owners submitted the motions for inclusion on the agenda. Whilst I have no doubt that the applicants were fully supportive of the role being played by GCBCS, I cannot conclude that the document of 18 June 2001 was a requisition by them for inclusion of motions on the agenda of the general meeting. Moreover, even if it could be so construed, it was not by the owners of a lot, but rather the “body corporate manager” who has no right to submit motions for inclusion. Alternatively, if it is argued that the motions were being submitted by the committee for inclusion on the agenda, then there is no evidence that the committee resolved to submit the motions. It is usual, and indeed expected that a committee should meet to determine matters such as motions it proposes be included on the agenda of a meeting. In this regard, the committee was under no obligation to accept any submission from the body corporate manager as to what motions should be so included. This is where the applicants appear to have erred. They appear to have assumed that the committee would and should act on the advice of the body corporate manager. I must conclude that the “proposed motions” reflected no more than the applicants preferred approach to the rectification of the building. I do not intend to invalidate the chairperson’s ruling that the motions submitted were “out of order”.

However, having concluded this, I do consider that the actions of the committee regarding this whole issue of rectification have been somewhat misleading, or at least not fully transparent, and certainly not in the overall interests of the body corporate. It is clear that the committee allowed, or at least acquiesced, to the motions in question being included on the agenda of the general meeting, and at the last opportunity (ie. at the meeting) adopted the approach of ruling the motions out of order, thereby leaving only one proposal (motion 22) on which the body corporate were entitled to proceed. I suggest that this type of approach is hardly transparent and in the interests of the body corporate as a whole. The committee could have avoided this by determining that the motions were not properly submitted at a committee meeting, and informing parties of this. I conclude that the committee has engaged in a rather cynical exercise in regard to the matter of rectification. A reading of the draft minutes of meeting appears to confirm this belief. I quote from the draft minutes as follows –

Following a lengthy discussion between a number of very concerned and angry owners who showed their disbelief in having to travel from interstate and other long distances, to now be told that there was no opportunity to discuss those motion ruled invalid by the chairman and were left with only one motion dealing with the “Remedial Works” which was submitted by Dr N Breitkreutz (Lot 43), and that there were no motions submitted by the committee to deal with the remedial works.

Mr Windsor asked the committee why the information was not conveyed to owners before this time, considering the time and effort put in by owners in arranging travel and accommodation to enable them to attend this meeting.

No response was forthcoming from the committee.

I assume that these draft minutes were probably prepared by GCBCS so are possibly not as objective as might reasonably be expected, I nevertheless consider that they reflect somewhat the cynicism of certain owners to the actions of the committee in regard to the issue of rectification. I further note that motions declaring vacant the position of chairperson and three committee members were carried at this meeting. Whilst this is not a specific reflection on the actions of the committee regarding the matter of rectification, it does appear to reflect a lack of confidence by a significant number of owners (at least 26 to 9) in the performance of certain members of the committee.

The body corporate submission also seeks to explain how motion 22 complies with the requirements of section 102 of the Accommodation Module dealing with major spending by the body corporate. In essence that section requires that where the proposed expenditure is in excess of the relevant limit for major spending, then the owner or committee submitting the motion must supply two quotes relevant to the proposal.

Notwithstanding that the motion was submitted by Dr Breitkreutz, as owner of lot 43, the body corporate submission seeks to justify the validity of the motion by relying on several arguments to claim that the requirements of section 102 have been satisfied, or alternatively, do not apply.

Firstly, the body corporate submits “motion 22 sought only to confirm work that had been previously authorised by the committee, and for which the relevant number of quotes had been obtained”.

Motion 22 provides in part –

Viz. Roof Repair $15,000

(2 quotes attached, I & P Topspray & Bragcourt)

New Fire Alarm System approx $47,000

New Awnings (already passed at AGM) $20,409

Install New Power Switch Board (already passed and built,

awaiting installation) $18,000

Further works can be done as Funds become available

The body corporate submission acknowledges that the committee’s expenditure limit is $4,400 (44 lots x $100 per lot). It then states that “the only additional work contained within that motion (and not previously authorised by the committee or in general meeting) was in relation to repairs to the roof to the value of $15,000.00. Two quotes were attached to the agenda in respect of that work ...”

I note that the three items of proposed expenditure other than the roof all involve expenditure in excess of the committee’s expenditure limit of $4400, and would therefore need to be considered at a general meeting, and not a committee meeting. Further, if expenditure had been previously approved at a general meeting, then why approve it again.

In the alternative, the body corporate seeks to argue that the committee’s previous approvals of expenditure in excess of its expenditure limit was justified on the basis that the spending was necessary to comply with “a statutory order or notice given to the body corporate” (see section 101(1)(d)). I note that whilst the submission annexes minutes of committee meetings where the expenditures were approved (see paragraphs 15 and 16 of submission), it does not similarly annex copies of the alleged statutory orders or notices it claims it was complying with (see paragraphs 15, 17 and 18 where alleged statutory notices were referred to but not annexed).

The body corporate submission then proposes a third alternative; namely that an unidentified part of the works involved required only one quotation, on the basis of section 103(3) that “for exceptional reasons, it was not practicable to obtain 2 quotes”. As I noted, the submission does not specifically identify which part of the work this alternative relates to. In the absence of such detail, I am not able to form an opinion on this aspect. However, it seems to me that no part of the rectification works would be so specialised that only one contractor was available for any particular aspect.

I do not accept that the body corporate’s submissions on the aspect of compliance with the requirements of section 102 have been substantiated. The body corporate’s submission does not stand up to reasonable scrutiny. When considered in its entirety, with the several alternatives, one is left with the impression that the body corporate or its advisers, subsequent to the event, has considered the several alternatives to compliance with the requirements of section 102, and have then sought to have the facts fit the alternatives. However, I am not satisfied that they do.

In the circumstances, I consider the position of both parties to the application to be biased towards a preferred outcome in respect of the rectification work. The position of neither party serves to benefit the wider body corporate (ie. all owners). I am not prepared to endorse the position of either party, and the only option open to me is to order a new general meeting be convened to consider all motions which might be submitted relating to the issue of rectification work to the building. Whilst I appreciate the urgency associated with rectification, I conclude that the interests of all owners are best served by a further meeting at which the owners, with the benefit of all available options based on the motions submitted by all owners, determine the preferred method of rectification of the building.

To facilitate this, I intend to order that a copy of this order be sent to all owners together with a notice inviting submission of motions for inclusion on the agenda of the further meeting. Owners are to be given 14 days to respond to the notice and to submit motions for inclusion on the agenda. Following this, the secretary shall give notice of the meeting, including on the agenda all motions which are received from owners in accordance with the terms of this order. I further intend to order that 14 days notice of the meeting is to be given. So that the meeting can properly consider the issue of rectification of the building, and have alternatively for appointment of body corporate manager, I intend to order that motions 15 and 22 as carried at the general meeting of the body corporate held on 1 October 2001 are invalid and of no effect. I repeat however that this office will not intervene to determine the most appropriate method of rectification of the building; this is a matter for the member of the body corporate in general meeting.

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