No. 9 Port Douglas Road [2002] QBCCMCmr 429 (3 July 2002)

RA MeekREFERENCE: 0330-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24368
Name of Scheme:	No. 9 Port Douglas Road
Address of Scheme:	9 Port Douglas Road PORT DOUGLAS QLD 4871

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

Michael McEvoy, the co-owner of lots 8, 9 and 11, and the company nominee of Famestock Pty Ltd, the owner of lots 1, 16 and 18



RA MeekI hereby order that the application by Michael McEvoy, the co-owner of lots 8, 9 and 11, and the company nominee of Famestock Pty Ltd, the owner of lots 1, 16 and 18, for an interim order that the body corporate refrain from any action regarding the management rights until after the owners vote on the issue at an EGM, is dismissed.

RA MeekI further order that the application for a final order that the Body Corporate to hold an EGM to decide if the current resident unit managers should continue to manage the building, is dismissed. n

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0330-2002

“No. 9 Port Douglas Road” CMS 24368

The applicant, Michael McEvoy, the co-owner of lots 8, 9 and 11, and the company nominee of Famestock Pty Ltd, the owner of lots 1, 16 and 18, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

Order the Body Corporate to hold an EGM to decide if the current resident unit managers should continue to manage the building.

The Applicant has also sought the following interim order of an adjudicator, quote -

Order the body corporate to refrain from any action regarding the management rights until after the owners vote on the issue at an EGM.

Section 225(1) 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 office sought submissions from the committee of the body corporate before determining this application for interim orders. That submission is available to me.

The interim order sought by the applicant is that the body corporate be restrained from “any action regarding the management rights until after the owners vote on the issue at an EGM”. In support of this interim order, the applicant concludes that –

The current managers have substantial debt on the management rights and the body corporate’s actions if successful would financial destroy the lives of the managers.

In response, the committee has stated in its submission that –

The committee is adamant that the body corporate has duly terminated the caretaking and letting agreement entered into between the parties on or about 27 February 1998 ... it is not open for the body corporate in general meeting to resolve for the agreement which has been validly terminated to now continue.

It is clear from these statements that the committee is purporting to act on the basis of what it believes to be the current legal position regarding its relationship with the applicant, or manager. The applicant however is seeking by order of this office to prevent the body corporate from proceeding to exercise rights which it considers it is entitled to exercise. For example, to enter contracts and the like.

This dispute essentially relates to the validity of a purported termination of a contract between the body corporate and the manager. Both parties have referred to previous applications to this office, namely 0167 and 0168 of 2002. This office has already expressed the view in the dismissal of one of these applications that this dispute is essentially one for the courts. In my view, this office should not now intervene to grant the relief sought by the applicant, namely be preventing the body corporate from exercising rights it believes it is entitled to exercise. This in my view would impose an unreasonable fetter on the rights of a party to a contract. If the applicant believes that its contract with the body corporate has been invalidly terminated, then its right of review of this aspect lies with the courts, and not by seeking to have this office fetter the contractual rights of the body corporate to the benefit of the applicant.

In reaching this conclusion, I give no warranty whatsoever to the prior actions of either party in relation to the contract, the termination of which is now in dispute. Both parties have made certain assertions regarding the determinations of applications 0167 and 0168 of 2002 which I do not propose to comment on, except to say that in the case of the committee submission, I disagree with its assertion that “the resolutions of the AGM on 21 February 2002 were valid and the applicant’s application was dismissed in full”. Yes, the application was dismissed, however the order in my view did not determine that the resolutions of the AGM on 21 February 2002 were valid. Rather, the adjudicator determined that the resolutions were not invalid on the basis proposed by the applicant. Whilst I note that the adjudicator did find that “I am satisfied that the meeting was called and held in accordance with the requirements of the Act and the Accommodation Module (and that) there is no evidence before me of any defect in the meeting procedure”, this is not a validation of the resolutions purported passed, as this was not the question before the adjudicator. Moreover, it seems to me that it is open for a court to find that notwithstanding that correct procedures might have been followed in respect of the meeting in question, that a purported termination of a contract was nevertheless invalid for some reason pertaining to the contractual relationship between the parties.

I therefore propose to dismiss the application for an interim order in terms as sought by the applicant. In the circumstances, I intend to proceed with my consideration of this application, and in particular the final order as sought by the applicant, as I consider no further investigation of this application is required before a determination can be made.

The applicant’s grounds are limited. The applicant refers to certain alleged determinations of the “Commissioner” in previous applications to this office, and further, to alleged levels of support for the “current managers” and those lots which seek to “dismiss the current managers”. The applicant concludes –

The committee is misusing it’s power and not representing all of the unit owners as they were entrusted. A minority of owners controls the committee and is acting only in their own interests. We have applied for at least 4 EGM’s without success.

The committee submission disputes certain of the applicant’s statements; in particular, its level of support. This issue does not particularly concern me. The submission denies that the committee is misusing its powers. Further, the committee denies that the “applicants have properly applied for at least 4 Extra Ordinary General Meetings”. The committee asserts the validity of its refusal to call the EGM’s on several grounds, including that at the time the applicant was purporting to apply for the EGM’s, the applicant had also made two applications to resolve a dispute. The committee commented that “... At that time such requests for EGM were frivolous and improper which the commissioner was deciding on the validity of the AGM and on the other issues in dispute”. The committee asserts that “it was not improper for the committee to await the outcome of the adjudicator’s decision in the disputes ...”. I disagree. The right of an owner to requisition a general meeting of the body corporate is a statutory right. Section 61 of the Accommodation Module provides that –

ÿRequirement for requested extraordinary general meeting [SM, s 61]
59.(1) An extraordinary general meeting (a “requested extraordinary general meeting”) of the body corporate must be called if a notice asking for an extraordinary general meeting to consider and decide motions proposed in the notice is—
(a) signed by or for the owners of at least 25% of all the lots included in the scheme; and
(b) given to the secretary or, in the secretary’s absence, the chairperson or, if the committee has not yet been chosen, given to the original owner.
(2) The secretary may be presumed to be absent if a notice is given to the secretary at the address for service of the body corporate, and no reply is received within 7 days.
(3) A requested extraordinary general meeting must be called and held within 6 weeks after the notice asking for the meeting is given.
(4) A requested extraordinary general meeting of the body corporate may be called even though the body corporate’s first annual general meeting has not yet been held.

This statutory right to have an EGM convened in my view overrides any other considerations which the committee have in this instance sought to raise as a basis for it not being required to convened the requested EGM. The basis of this conclusion is that the right is a statutory one and it is not made subject to any element of discretion on the part of the secretary or the committee. Further, it is not made subject to any exceptions in the nature of those raised by the committee in this instance. The ability to request an EGM is a means by which an owner or group of owners may require a matter to be determined by the body corporate in general meeting without waiting for the next general meeting of the body corporate. Whilst an adjudicator might excuse a secretary from convening a requested EGM in circumstances where it is just and equitable to do so, the secretary and the committee have no right to simply refuse to convene a requested EGM.

The committee continues –

In any event, the purported requests for EGM’s were invalid as they did not contain motions which were capable of being put to a meeting of the body corporate. ... The request itself must be valid and in particular must contain motions which are to be put to the EGM proposed to be held. ... The purported request for the EGM is therefore invalid and ineffective. ...

I do agree with the intent of these statements. The section clearly refers to the “motions proposed in the notice”. Moreover, there is a very good reason why the notice requesting that an EGM be called must contain the motions proposed to be considered at the meeting, in a form in which the motions can be so considered. It is because they are the motions of the owner or owners requesting the EGM be convened. It is not for a body corporate to come up with the form or content of the motions proposed. Such a requirement would not make sense and would only raise possible allegations of the body corporate not proposing motions in the form intended by the owner or owners requesting the meeting. Consequently, it is incumbent on the owner or owners requesting the EGM to state in the notice the clear form of the motions proposed to be considered. However, having said this, I would not allow this basis to be used unreasonably against an owner or owners requesting a meeting. For example, the failure to state the type of resolution required would not in my view invalidate the notice unless it could be shown in the particular instance that the failure was somehow significant.

I note that the copy of the notice of request provided to me requests that an EGM be held “to discuss and vote on the following matters.

a) The removal of the committee members and their replacement;

b) The roof leaks and options to solve the problem;

c) The reimbursement of the managers of the overdue interest charged on body corp. levies;

d) The relief from the legal fees charged to the managers for the recovery of body corp. levies.”

I conclude that the above statement of matters to be discussed at the requested EGM is not sufficient to satisfy the requirements of the section and I therefore decline to order in terms as sought in the final order to this application. Accordingly the application is dismissed.

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.