Village Square [2002] QBCCMCmr 32 (25 January 2002)

C G YOUNGREFERENCE: 0001-2002

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24715
Name of Scheme:	Village Square
Address of Scheme:	2 Sickle Avenue HOPE ISLAND QLD 4212

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

Keith KIERNANDER, as the nominee for Rossford Investments Pty Ltd A.C.N.010 237 902 the owner of Lot 129,



C G YOUNGI hereby order that the application for orders that the resolution of the body corporate committee of 11 December 2001 to employ an Operations Manager is invalid, that the body corporate withdraw its offer of employment for the position of Operations Manager, and that the body corporate not be held responsible for any legal action arising as a result of the withdrawal, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0001-2002

“Village Square” CMS 24715

The applicant, Keith Kiernander for Rossford Investments Pty Ltd of Lot 129, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote -

“An urgent order is being sought to be issued not later than 7^th January 2002 being the date when a so called “Operations Manager” is to start his contract who, in this submission, has wrongly been offered the position and who is most likely to accept the offer in that the offeree is well known to the chairman and probably has previously indicated to the chairman a willingness to accept the offer. The order sought is an order that the chairman and committee of the Village Square Body Corporate immediately withdraw the offer. A further order is requested namely that other than the Body Corporate be held responsible for any legal action that the offeree may bring by reason of withdrawal of the offer.”

The applicant has also sought an interim order in the same terms as above.

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)).

This is the second application for this scheme that I have had to deal with in recent times, and one of a number that adjudicators have generally had to determine. The scheme “Village Square” has a troubled history to date both as to its success as a commercial venture and variously in the relationships between owners, committees and the ex Resident Manager.

As this application was only received in this office on 2 January 2002 and it sought an interim order to be made by 7 January, on Tuesday 4 January I conducted a teleconference between the parties; Vincent Vine for the applicant Keith Kiernander, and Ray Ringuet, chairman and representative for the respondent body corporate. The purpose of the teleconference was to generally obtain information as to the position of both parties, and in particular to obtain information so that an interim decision could be made promptly concerning the proposed employment by the committee of an Operations Manager. My decision given to the parties at the end of the teleconference was: that I would not intervene to stop the employment of the person (Mr Hyde), taking into account the chairman’s information that the employment agreement included a 3 month probation clause; that the committee should consider its position regarding both the employment itself and the terms of employment, especially in regard to the operation of By-laws 32 and 40 as raised in the application; and lastly, that I would provide the committee with a copy of the application and seek its written submission before considering any appropriate orders.

A copy of the application was subsequently provided and distributed to all committee members, with an invitation for the committee to make a written submission on the matters raised. A copy was also sent to the Body Corporate Manager, Gold Coast Body Corporate Specialists (principal representative Ron Beverstock). Both responded with submissions. I have also received, uninvited, over the period since the teleconference, three submissions from Vine and two from Kiernander. The legislation provides for an applicant to amend an application providing copies of the further information are served on the other parties and they are given time to respond – however because of the frequency in applicants forwarding further material, it is office case management practice for this requirement, which both lengthens the process and is an inconvenience to the other party and those other persons invited to respond (who must also be notified), not to be followed where either the document contains nothing already known to the respondent or it contains nothing of substance not already raised in the application. That was the assessment in respect of these documents. This process has not disadvantaged the respondent.

Having made a verbal decision during the teleconference not to intervene to halt the employment of an Operations Manager, and because the interim and final orders being sought are identical, it seems appropriate and in the interests of all parties that this order should be a final determination of the matters raised in the application. That is, though an interim order, this order is the final order for the application.

In the grounds to the application, and in the teleconference, the applicant puts forward the following in support of his order to stop the employment of an Operations Manager –

• that “offers and then appointments of this type are within the exclusive province of the lot owners meeting as a properly constituted General Meeting”.

• the appointment must follow the legislative requirements for a Body Corporate Manager because of the “delegation of Body Corporate powers, an authority to spend Body Corporate moneys, and to act as an agent of the Body Corporate.

• the duties of the position conflict with By-laws 32 and 40 which give the owner of Lot 1 the exclusive right to maintain the common property.

• there is a motion to be decided shortly at the annual general meeting to be held on 30 January 2002, Motion 18 “Monthly Promotional Events”, for the appointment of a Josseline Boehnert as a Promotions Manager for “$400 per week (the salary being exclusive of costs)”, and therefore the committee’s appointment of an Operations Manager, with similar duties, renders the motion irrelevant.

Before addressing these grounds, there are a few general observations points I wish to make.

Firstly, “Village Square” is regulated by the Commercial Module. Schemes under this module are the least regulated of all schemes. This was intentionally done as it was considered at the time of developing the modules that owners in a commercial complex would already have access to financial and legal advice and therefore should not be regulated to the degree that residential or rental home owners are. A comparison of the Commercial Module provisions with either the Standard or Accommodation Module will readily show those differences.

Secondly, the body corporate in general meeting is the paramount decision making body, including having the power to both permanently restrict matters the committee may deal with and to overturn a committee decision. Accordingly, the body corporate in general meeting has the power to rescind the committee’s decision to employ an Operations Manager and if it wishes, to terminate the employment, though it must understand the predictable reaction of the employee.

Lastly, the owners elected the current committee and presumably did so because a majority of them had confidence in their making decisions in the interests of owners. This application concerns the dissatisfaction which two, or more, owners have with a committee decision.

Turning to the applicant’s four grounds, the first ground is clearly wrong. Whereas under other regulatory modules a committee’s jurisdiction to expend money is regulated, under the Commercial Module there is no similar restriction on committee spending. The absence of such a restriction is an example of the laissez-faire thinking of the legislature concerning commercial scheme regulation.

In regard to the statement that certain duties of the position are caught by the Body Corporate Manager provisions of the legislation, this is not my view after a review of the position duty statement. The legislation provides for the delegation of the powers of the committee and executive committee members. The duties highlighted by the applicant include, supervising gardeners and cleaners, inspecting premises, utilising contractors as authorised by the committee, creating advertising and public relation programs, and spending a restricted amount of body corporate funds for certain purposes. None of these are caught by the delegation of powers provisions – for example, a committee can authorise an employee to expend funds on maintenance items (tap washers, light bulbs, fertiliser etc) without their being delegated treasurer powers. Also, the claim of the employee acting as agent (see the “General” section of the duty statement) is not a general delegation to act as agent, but merely a reference to his role and his responsibility to act in the owner’s commercial interests.

By-law 40 purports to give exclusivity to the rights of the owner of Lot 1 given under By-law 32. The latter by-law seeks to give this owner the sole right to contract with the body corporate for the letting of lots and the maintenance and administration of the common property. The applicant, however, merely states in his grounds that “the duties outlined in the letter of offer to Mr L Hyde include functions to which the owner of Lot 1 has exclusive rights under the Village Square By-laws (see clauses 32 and 40 of these by-laws...)”. Nowhere does the applicant specify which duties are in conflict. It is a broad statement for which the applicant has not supplied particulars. It is not my task to trawl through a document (the duty statement) seeking evidence to support an applicant’s general statement. Is the applicant saying, for example, that the duties to supervise gardeners and cleaners, and inspect premises, offends against the by-law provision that only the owner of Lot 1 can contract to maintain the common property? It seems to me that the employee is not maintaining it but overseeing the work done as to its adequacy. Also, the exclusive right given by the by-law to this owner to “administer” the common property may conflict with the provisions of the legislation that requires the body corporate to administer the common property (see sections 87 and 114 of the Act). While the maintenance of the common property (see also sections 87 and 114) may be contracted out, there are matters of administration that I consider cannot be carried out by others, unless the term is narrowly construed. I also understand that, following legal action, there is no current management rights agreements with the owner of Lot 1. In the circumstances, I do not propose to deal with this ground any further.

The final objection by the applicant is that the committee is offering employment for a position that is the subject of a motion to be decided at the forthcoming annual general meeting. The concern appears to be that the appointment of an Operations Manager will make the position of Promotions Manager under Motion 18, redundant.

Although the applicant believes the duties of the two positions are largely the same, that is not strictly true but, in any case, there is nothing to prevent the body corporate from employing persons in both positions. That is, if as I suspect there is a concern by the applicant that the chairman may rule the motion out of order on this basis, then that is not a position disclosed in the committee’s submission (through Herd & Janes Lawyers). Nor is it the view of the Body Corporate Manager who has stated in his submission that “The chairman has advised that he and the other committee members (with the exception of the applicant) considered that the employment of Mr Hyde will have no affect on the outcome of the voting (on a motion) to appoint a person to “arrange and supervise the said (monthly) promotional events”. Nor is it my view that the chairman could rule the motion out of order on the basis that a person had already been employed in that capacity – not only would it be untrue, but there is nothing to prevent the body corporate employing two persons in similar positions.

From the teleconference and the submissions of the committee and Body Corporate Manager, I am now aware that the employment of the Operations Manager was in fact discussed in informal meetings of committee members for some two months prior to the committee meeting of 11 December 2001 when the formal decision to employ was made. The applicant was present at one of these meetings and also when Mr Hyde was introduced to a number of members. The past business relationship between Hyde and Ringuet was also disclosed to committee members. However, these points are really only background to the matter – the indisputable fact is that the committee has the power to employ an Operations Manager, and do so despite Motion 18, and properly resolved in meeting to employ a person (Hyde) in that position.

In conclusion, there is nothing in the grounds raised by the applicant to persuade me that the engagement of the Operations Manager was unlawful and that the engagement resolution should be voided. For the foregoing reasons I have dismissed the application.

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 applicant considers that an appeal of this decision is warranted, then it should appeal the interim order.

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