Emerald Lagoon [2002] QBCCMCmr 141 (15 March 2002)

DPGardinerREFERENCE: 0635-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	5260
Name of Scheme:	Emerald Lagoon
Address of Scheme:	24 Ron Penhaligon Way ROBINA QLD 4226

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

Mr Kenneth John Crozier, the Co-Owner of lot 62



DPGardinerI hereby order that the application for orders:

2n

1. That the ruling of the Chairman to rule motion number 12 contained in the agenda of the annual general meeting held on the 29^th September 2001, out of order, be reversed, and that all votes cast be counted, and if possible, the result of the motion be declared carried or lost.

2. That the body corporate management agreement be declared invalid.
3. That the committee meeting held on the 7^th September 2001, be declared invalid.

is dismissed.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0635-2001

“Emerald Lagoon” CTS 5260

The applicant Mr Kenneth John Crozier, the Co-Owner of lot 62, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

“1. That the ruling of the Chairman to rule motion number 12 contained in the agenda of the annual general meeting held on the 29^th September 2001, out of order, be reversed, and that all votes cast be counted, and if possible, the result of the motion be declared carried or lost.

2. That the body corporate management agreement be declared invalid.

3. That the committee meeting held on the 7^th September 2001, be declared 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 applicant states as follows:

Motion 12 was submitted by the applicant, and endeavoured to appoint another body corporate manager. The motion was submitted prior to the end of the financial year nad in compliance with the Act. The body corporate manager, Mr. Rick Culpitt advised the chairman and those present at the AGM, that the motion is out of order on the basis that the current manager had a valid agreement with the body corporate and that the outcome was therefore unenforceable.

I dispute this advice on the grounds that:
.

1. success of the motion is enforceable notwithstanding the status of any agreement the body corporate manager have with the body corporate. The motion to appoint another body corporate manager was placed in the hands of the secretary & body corporate manager prior to the end of June 2001, and if successful, would have had the effect of terminating any arrangement the body corporate manager had with the body corporate, as it would clearly indicate the wishes of the owners at large.

2. the agreement is dated 16^th September 1999 and extends for a period of one year to 15^th September 2000. The body corporate manager relies on a clause which allows him to continue with and extend the agreement, if the body corporate does not advise of their intention not to extend the agreement prior to the 16^th September 2000. In this manner, the agreement can be extended to a full 3 years. All agreements for a 3 year period require that least one more quote be offered to owners in general meeting, as the cost of the agreement, ($6,400 x3, exceeds the relevant limit for major expenditure. This was not available to owners at the 1999 AGM , and therefore notwithstanding the provisions of the agreement for a second term, a third term seems clearly at odds with the legislation. From the ‘minutes’ of the body corporate committee meeting held on the 7^th September 2001, it is apparent that the committee members who attended that meeting assumed the term of the agreement extended to 15^th September 2002, i.e a 3 year term.

The AGM was scheduled to take place on the 29^th September, 2 weeks after the 16^th September 2001, a date which, in the view of the manager, prevented the owners from exercising their rights to engage a new manager.

3. the body corporate committee meeting held on the 7^th September 2001 be declared invalid.

The meeting of the committee did not comply with section 28 of the Standard Regulations with regards to notice, either to members of the committee or to owners. The minutes seek to validate the meeting under section f the act. Again, the provisions of the act were not complied with, albeit a majority of the committee passed certain resolutions. These resolutions could not be interpreted as an “emergency” situation. I would have been available for this meeting, and was easily contactable.

In addition to the information supplied by the applicant, I have also been provided with submissions from the body corporate and the body corporate manager. Whilst I have not set out the information from those sources in any detail, due consideration has been given to all the information that has been provided.

The Annual General Meeting that was held on the 29^th September 2001 appears to have been convened in accordance with the provisions of part 4 of the Body Corporate and Community Management (Standard Module) Regulation 1997 and regularly conducted. However, particular issue is taken by the applicant with the decision by the chairman to rule the twelfth motion on the agenda out of order pursuant to section 47 (1) (a) of the Act.

Motion number 12 on the agenda was a proposal by the applicant that Active Bodycorp Management Pty Ltd be appointed as the body corporate manager for the scheme.

The decision to rule that motion “out of order” was made because the chairman of the body corporate who chaired the general meeting considered that the motion if carried would be unlawful or unenforceable because, in his view, an agreement with the existing body corporate manager was still in force.

The applicant also challenges the view taken by the chairman that there was such a valid contract then current.

That contention proceeds on the basis set out in the grounds raised by the applicant in the application, namely:

“the agreement is dated 16^th September 1999 and extends for a period of one year to 15^th September 2000. The body corporate manager relies on a clause which allows him to continue with and extend the agreement, if the body corporate does not advise of their intention not to extend the agreement prior to the 16^th September 2000.

In this manner, the agreement can be extended to a full 3 years. All agreements for a 3 year period require that least one more quote be offered to owners in general meeting, as the cost of the agreement, ($6,400 x3, exceeds the relevant limit for major expenditure. This was not available to owners at the 1999 AGM, and therefore notwithstanding the provisions of the agreement for a second term, a third term seems clearly at odds with the legislation. From the ‘minutes’ of the body corporate committee meeting held on the 7^th September 2001, it is apparent that the committee members who attended that meeting assumed the term of the agreement extended to 15^th September 2002, i.e a 3 year term.”

The AGM was scheduled to take place on the 29^th September, 2 weeks after the 16^th September 2001, a date which, in the view of the manager, prevented the owners from exercising their rights to engage a new manager.”

Section 80 of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) prohibits the term of engagement of a body corporate manager from exceeding 3 years.

I have read the administration agreement between the body corporate manager and the body corporate which relevantly provides:

Clause 3:
(a) the engagement is for the Term.

(b) this engagement will be extended by the body corporate for one year the end date stated in Item D unless the Body Corporate decides at a general meeting before that date not to

extend this agreement.

Reference Schedule

Item D Term of one year commencing on the 16^th day of September 1999 and ending on the 15^th September 2000.

As any extension of the agreement was expressly conditional upon the body corporate not determining to decide not to extend the agreement, the agreement must be taken to have been extended in the absence of any evidence of a contrary decision by the body corporate.

It seems undisputed that the body corporate management agreement is in its third year with the agreement due to expire on the 15^th September 2002 In any event, the current body corporate manager continued to perform the role of the body corporate manager after 15^th September 2001 and continues to do so.

I find that the agreement has been twice extended and is due to expire on the 15^th September 2002.

For the reasons set out above, I consider that the applicant is incorrect in viewing the agreement as being a 3 year agreement and as a result, I find that the agreement was a 1 year agreement with 2 periods of extension, each of one year. Given that there are 64 lots in the scheme, the limit for major spending on any particular matter by the body corporate is $12,800. The reference schedule to the administration agreement defines the payment to the body corporate manager for one year as being $6,200.

As a result, the amount paid to the body corporate manager each year was $6,200 for an engagement of one year capable of being extended in accordance with the formula set out above and therefore cannot be described as being major spending requiring quotations in accordance with section 104 of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

In light of my finding that the body corporate management agreement or administration agreement was still in force at the time when the Annual General Meeting was held, the chairman was correct in ruling motion 12 “out of order” as any agreement entered into with a body corporate manager at a time when there was an existing agreement in place with another body corporate manager would have been unlawful and unenforceable as such an agreement would have been impossible to perform.

I should mention that the body corporate management agreement expires on 15 September 2002 at which time it is expected the body corporate will have called for tenders for the body corporate contract, and will have appointed a body corporate manager whose contract would begin on 16^th September 2002.

The last matter for consideration is whether the body corporate committee meeting held on 6^th September 2001 was valid.

At the time when the meeting was held, there were 4 members of the Committee present which constitutes a quorum as there were 7 members on the body corporate committee in total. Whilst it is correct to say that there had not been compliance with the requirements of section 28 of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module), I consider the resolution passed was valid as there was compliance with section 35 of the Module in that a majority of the committee agreed to motion in question and notice was given to as many members as it was practicable given that an emergency had arisen, namely that if the resolution had not been passed, the body corporate may have entered into an agreement that was unlawful and unenforceable which may have rendered the body corporate liable to be sued.

In the result, the application is dismissed.