Mariner Court [2002] QBCCMCmr 24 (18 January 2002)

RA MeekREFERENCE: 0457-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12147
Name of Scheme:	Mariner Court
Address of Scheme:	3642- 3648 Main Beach Parade MAIN BEACH QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by John Francis Clarke, the owner of lot 10

RA MeekI hereby order that at the next general meeting of the body corporate, the body corporate will include a motion in the terms of motion 14 ruled out of order at the AGM held on 2 June 2001 and headed “Minutes of Committee Meetings” and such motion will be voted on and determined by ordinary resolution.

I further order that with such motion, the body corporate shall include the following paragraphs of my reasons, by way of explanation to members of the implications of the proposed motion, under the heading “Extract from Adjudicator’s Reasons for Decision in 0457 of 2001”-

I now turn to consider motion 14. The chairperson ruled this motion out of order “because it was unenforceable due to uncertainty”. There is no further explanation of the alleged “uncertainty”. On its face, I do not consider that the terms of motion 14 are uncertain, or at least, cannot be understood with reasonable certainty. The motion in essence seeks that the committee observe certain minimum standards in the recording of committee minutes. The opening proposition is that committee minutes “provide better and more details”. Specifically, the additional details should be included where (1) agreement is not unanimous, the names of dissenting members and their reasons for dissent; and (2) in the instance of expenditure on “large projects” which have not been budgeted for. I must say that the second instance referred to by the applicant is less clear to me, given that a committee can only approve expenditure up to a limit of $3300 (33 lots by $100 per lot).

There is no provision in the legislation about how minutes are to be kept, except that they should be “full and accurate” (see section 36). It is open for a body corporate to direct its committee specifically how minutes are to be kept. However, in deciding to direct its committee in this regard, body corporate members should consider the potential burden they might be imposing on the committee. For example, if there are a small number of regular dissenters within the committee, the obligation to record the names of dissenting members and their reasons might become very onerous. I certainly would not consider it reasonable that a body corporate committee be required to record copious details of dissenting committee members reasoning. There is no particular benefit in this to the body corporate; rather it would seem designed to serve the interests of the dissenting committee member. In my view, a short précis of the dissenting reasons would suffice. For example, Bill Bloggs dissented to the committee resolution for reasons of cost and lack of benefit to owners generally.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0457-2001

“Mariner Court” CTS 12147

The applicant, John Francis Clarke, the owner of lot 10, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1. Motion. The body corporate be charged and penalised as per Act.

2. Motions 12 and 13 allowed to be voted on after I put my case to unit owners. Motion 9 would need to be voted on again.

3. Motion to be voted on after ....

4. The Body Corporate committee to be counselled.

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 variously states or alleges that –

1) the AGM was held outside the time span provided for in the legislation;

2) the committee “deliberately or incompetently placed my motions 12 & 13 after motion 9 so that my motions became redundant when motion 9 was passed”;

3) the reason for not allowing motion 14 to be voted on was “not a valid reason”;

4) the body corporate committee “disclosed my confidential email vote faxed via the body corporate manager”;

5) the chairman Noel Henley was not eligible to chair the meeting as he had sold his unit;

6) the chairman “allowed the manager to participate in committee and AGM discussions where the manager has a financial interest”.

The allegations relate to the AGM of the body corporate held on 2 June 2001 (the meeting). The applicant objects to the consideration of motion 9 (headed “Body Corporate Manager”) ahead of the motions submitted by him being motions 12 (headed “Certificate Fees”) 13 (headed “Insurance Commission”) and 14 (headed “Minutes of Committee Meetings”). The minutes record that motion 9 was carried by the vote of 15 yes, 1 no, and 4 abstentions. Motions 12, 13 and 14 were ruled out of order by the chairperson for the stated reasons that the motions conflicted with the terms of the contract already approved by motion 9, in the case of motions 12 and 13, and because it was alleged to be unenforceable due to uncertainty, in the case of motion 14.

This is a difficult application to resolve, as there is no clear answers. Some initial comments can be made. The meeting was held some two days out of time. I have been provided with an explanation of the delay in the submission of the body corporate manager, which submission was provided with the authority of the committee. I accept the explanation of the committee for the delay, and consider that it was not significant or prejudicial such that any action is required or sanction should be imposed.

In respect of the order of motions on the agenda, the manager / committee submission states –

The order of motions on the agenda was approved by the then committee at its budget meeting held on 27/04/01. ... The agenda followed the standard practice of committee motions first, followed by motions submitted by individual owners in the order in which they were received.

There was no procedural motion moved at the AGM itself to change the order in which motions were considered, either by the applicant’s proxy (who was present) or by any other person.

Neither the applicant’s proxy, who was present at the meeting nor any other person present at the meeting moved to dissent from the chairman’s ruling on Motions 12 and 13.

I consider this to be a somewhat artificial explanation on the part of the committee. Section 47 of the standard module provides that the chairperson must rule a motion out of order if the motion, if carried, would conflict with the Act, this regulation, or the by-laws, or be unlawful or unenforceable for another reason.

It is the role of the committee to prepare the agenda for the AGM. I consider that the committee should have foreseen the potential conflict between the applicant’s motions and motion 9, and taken some action to address the situation. For example, the motions could have been re-arranged, with the applicant’s motions preceding motion 9. Instead, it seems that the committee acquiesced to the advice of the manager, who obviously does have a conflict of interest in the current scenario.

However, the mere re-arrangement of the motions would not have resolved this situation. The motions of themselves create a conflict which needs to be overcome or dealt with in some way. What would the situation be if the meeting resolved in favour of all three motions, 12, 13 and then 9. How would the apparent conflict between the terms of motions 12 and 13, and the provisions of the manager’s agreement have been resolved. Moreover, it is by no means clear that the body corporate manager would accept the implications of motions 12 and 13 being carried without seeking a set off adjustment in its fees for the management contract carried pursuant to motion 9.

It would be naive of the applicant and other owners to think that they could vote to reduce or take away certain sources of the manager’s income from a body corporate, and that the manager would not seek some other change in its agreement to compensate for this. The manager explained as much to the applicant in his letter of 19 March 2001 to the applicant. Body corporate’s can’t unilaterally impose reductions in the nature of those proposed in motions 12 and 13 on a manager, and reasonably expect the manager to just accept such reductions in their fees.

Given this scenario, I conclude that the body corporate committee needed to play a far more active role in resolving this apparent conflict. The committee could not have prevented the owner (the applicant) from including the motions on the agenda, as an owner has such right. However, the committee should have intervened by firstly consulting with the manager as to its attitude to the proposals and once this was known, then determining a course of action around such response. The uncertainty was whether or not the applicant’s motions would be carried. The committee could not know this. However, the committee could have included far greater explanation in the notice of meeting, pointing out the apparent conflict, and explaining that the owners could not resolve in favour of all three motions. Alternatively, there might have been two body corporate manager appointment motions included on the agenda; one as per motion 9, and a second, included on the presumption that motions 12 and 13 were carried, at a higher rate.

In any event, the applicant’s motions did present the body corporate committee with a difficult position. I do not accept that the applicant’s solution of simply rearranging the order of the motions would have resolved this. If anything this would have simply lead to a further difficulty. The benefit of the applicant’s approach however would have been that it forced the committee to find some more appropriate solution to the issue rather than simply ignoring the problem by ruling the applicant’s motions out of order.

Notwithstanding my criticism of the committee’s lack of action, I do not intend to order the invalidation of the body corporate manager’s appointment, and the reconsideration of motions 12, 13 and 9, in that order. I can see no real or significant benefit to the body corporate in doing this. As I explained above, there a significant difficulties inherent in this approach, and whilst I conclude that the committee should have approached this matter differently, I am not prepared to now create a greater difficulty for this body corporate. In coming to this conclusion, I have noted the votes received in respect of motions 9, 12 and 13 from voting papers. On the voting papers, motion 9 was carried by a yes vote of 13, nil no votes, and 1 abstention. The minutes record the final vote for the motion as being 15 for, 1 against, and 4 abstentions. It is clear from that that the manager currently enjoys considerable support within this body corporate, or at least, of those owners who choose to vote.

In contrast, the votes for motions 12 and 13 were 4 yes, 2 no and 7 abstentions, and 5 yes, 4 no and 4 abstentions respectively. I acknowledge that on these figures, both motions were carried by the barest of majorities. However, there were six owners at the meeting, represented either in person or by proxy, whose votes on these motions were not counted. Given the closeness of the vote on the applicant’s motions, it is impossible to now know whether these motions would have been carried, had the votes of the remaining 6 owners been included. In the circumstances, I am prepared to regard the motions as mutually exclusive; that the overwhelming majority of votes in favour of the appointment of the manager overrides and invalidates the applicant’s motions seeking to alter the basis of the manager’s appointment.

I now turn to consider motion 14. The chairperson ruled this motion out of order “because it was unenforceable due to uncertainty”. There is no further explanation of the alleged “uncertainty”. On its face, I do not consider that the terms of motion 14 are uncertain, or at least, cannot be understood with reasonable certainty. The motion in essence seeks that the committee observe certain minimum standards in the recording of committee minutes. The opening proposition is that committee minutes “provide better and more details”. Specifically, the additional details should be included where (1) agreement is not unanimous, the names of dissenting members and their reasons for dissent; and (2) in the instance of expenditure on “large projects” which have not been budgeted for. I must say that the second instance referred to by the applicant is less clear to me, given that a committee can only approve expenditure up to a limit of $3300 (33 lots by $100 per lot).

There is no provision in the legislation about how minutes are to be kept, except that they should be “full and accurate” (see section 36). It is open for a body corporate to direct its committee specifically how minutes are to be kept. However, in deciding to direct its committee in this regard, body corporate members should consider the potential burden they might be imposing on the committee. For example, if there are a small number of regular dissenters within the committee, the obligation to record the names of dissenting members and their reasons might become very onerous. I certainly would not consider it reasonable that a body corporate committee be required to record copious details of dissenting committee members reasoning. There is no particular benefit in this to the body corporate; rather it would seem designed to serve the interests of the dissenting committee member. In my view, a short précis of the dissenting reasons would suffice. For example, Bill Bloggs dissented to the committee resolution for reasons of cost and lack of benefit to owners generally.

In the circumstances, I am prepared to order that at its next general meeting, the body corporate again consider motion 14 as proposed by the applicant at the meeting, and this time, vote on such motion. However I intend to further provide that the notice include a copy of my statements regarding the motion as I consider that these statements help to place the motion in a context for owners to consider it.

I do not propose to consider the remaining three allegations of the applicant. Specifically, the applicant has not sought orders in respect of these matters. Further, I find no substantial detriment to the applicant, or other owners, arising from these aspects, even if they are established.