The Sands [2002] QBCCMCmr 499 (13 August 2002)

DJ ReardonREFERENCE: 0309-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14967
Name of Scheme:	The Sands
Address of Scheme:	40 The Esplanade, SURFERS PARADISE QLD 4217

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

Ross Devencorn and Lynne Rockett, the Owners of Lots 18, 66 and 72


DJ ReardonI hereby order that the application for an order “that the Annual General Meeting held on the 22^nd of March 2002 be declared invalid and that any motions passed at that meeting be declared null and void” is dismissed. 2y
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0309-2002

“The Sands” CTS 14967

1.	Order sought

The Applicants, the Owners of Lots 18, 66 and 72, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote-

“That the Annual General Meeting held on the 22^nd of March 2002 be declared invalid and that any motions passed at that meeting be declared null and void.”

Section 223(1) of the Act 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 the 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 community management statement for “The Sands” community titles scheme indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (“the Standard Module”) applies to the scheme.

2.	Application and submissions

This dispute resolution application was made on 22 May 2002. On 30 May 2002, the Commissioner for Body Corporate and Community Management invited the Committee for the Body Corporate, and the Body Corporate Manager to make a written submission about the application. The Body Corporate Manager has made a written submission on behalf of the Committee. Pursuant to section 196 of the Act, the Commissioner provided the Applicant with a copy of the Committee’s submission. The Applicant has made a brief reply to the Committee’s submission.

On 23 July 2002, the Commissioner for Body Corporate and Community Management made an initial case management recommendation that the application should be the subject of departmental adjudication.

3.	Matters in Dispute

As stated above, this application concerns the annual general meeting of the Body Corporate for “The Sands” held on 22 March 2002. The Applicant considers that the meeting should be declared invalid, and any motions passed at the meeting should be declared null and void on three main grounds. I intend to consider each of the Applicants’ grounds in turn.


3.1 Notice of general meeting

In the application, the Applicants argue that they were not provided with adequate notice of the annual general meeting of 22 March 2002, in that they received the notice of meeting on 4 March 2002.

Section 43 of the Standard Module provides that “a general meeting must be held at least 21 days after notice of the meeting is given to lot owners”. In its submission, the Committee states that the notice of annual general meeting of 22 March 2002 was posted to owners on 1 March 2002, and that the material would have been available in the Applicants’ post office box on 2 March 2002.

In its submission the Committee indicates that the distribution of the notice was delayed by mechanical problems with a photocopier. While I accept that this sort of problem can and does arise from time to time, I consider that this is largely irrelevant to an assessment of whether or not owners were afforded proper notice of a general meeting.

In their reply to the Committee’s submission, the Applicants make reference to sections 38 and 39A of the Acts Interpretation Act 1954 (“the AIA”). These sections make provision for the interpretation of provisions of Acts regarding service of documents, and the reckoning of time. An important question that arises is whether the 21 days referred to in section 43 of the Standard Module starts running at the time the notice is posted to owners, or whether the period commences at another time.

Notwithstanding section 39A(1)(b) of the AIA, which provides that “if an Act requires or permits a document to be served by post, service is taken to have been effected at the time at which the letter would be delivered in the ordinary course of post, unless the contrary is proved”, it has generally been the position of adjudicators under the Act, that the term “given” as used in section 43 of the Standard Module refers to the date that the notice of meeting is posted to owners, rather than the date that owners are likely to receive the notice in the ordinary course of the post.

The rationale for this position is largely based on the difference in notice requirements in the current Act, compared to the previous legislation, the Building Units and Group Titles Act 1980 (“the BUGT Act”). Section 1(4) of schedule 2 of the BUGT Act states that, “notice of a general meeting of a body corporate shall be served on each proprietor and first mortgagee of a lot, as ascertained from the roll, at least 7 days before the meeting”. I understand that this provision was interpreted to mean that owners had to receive the notice at least 7 days before the meeting. Such a position places a significant onus on body corporate secretaries to be able to determine the likely time for posting documents to each owner of a lot included in the scheme, some of whom may be located anywhere in the world.

It has generally been the view of adjudicators that the increase from 7 days under the BUGT Act, to 21 days under the current Act is intended to create more certainty regarding this issue by removing the requirement that owners receive notice of a meeting 7 days before hand, and introducing a longer notice period of 21 days which includes postage time, but should be sufficient to provide all owners with adequate notice of a general meeting regardless of where they reside.

It is my view that this interpretation is “ the interpretation that will best achieve the purpose of the Act” and therefore should be preferred (section 14A(1) of the AIA).

Applying the above principles, and applying 21 clear days after the notice was posted (excluding the day of postage and the day of the meeting), it is my view that according to section 43 of the Standard Module, the meeting should not have been held prior to 23 March 2002, which was the day after the meeting was actually held.

Notwithstanding that section 43 was not strictly complied with in this case, it does not necessarily, or automatically follow that the meeting and decisions made at the meeting are invalid or unlawful, rather the legislation empowers an adjudicator to make an order that is just and equitable in the circumstances (section 223 of the Act). In this case, I am not satisfied that I should disrupt, or invalidate the annual general meeting of 22 March 2002, on the basis of insufficient notice of meeting as raised by the Applicant. I am not convinced that the slightly reduced amount of notice resulted in any unfairness, or inequity such that the meeting should be disrupted.


3.2 Counting of votes for motions 10 and 11

The next issue raised by the Applicants concerns the results of voting declared in respect of motions 10 and 11. The minutes of the meeting record these motions, and the results of voting in the following terms, quote-

“10. Before the motion was declared, Mr T O’Donnell requested a poll vote on the motion.

The motion was DEFEATED by a poll vote with 18015 UOE voting in favour, 18360 UOE voting against and 3520 abstaining (The poll vote overturned the count of 18 votes in favour, 17 votes against and 4 abstentions) that the Body Corporate agrees with the Manager, Sands Gold Coast Pty Ltd ACN 079743561 to enter into the Ground Maintenance Contract as circulated with this motion. The Body Corporate is authorised to enter this Ground Maintenance Contract by affixing its common seal thereto under the signatures of two Committee Members”.

“11. Before the motion was declared, Mr T O’Donnell requested a poll vote on the motion.

The motion was DEFEATED by a poll vote with 18015 UOE voting in favour, 18360 UOE voting against and 3520 UOE abstaining. (The poll vote overturned the count of 18 votes in favour, 17 votes against and 4 abstentions) RESOLVED with votes in favour, votes against and abstentions That the Body Corporate agrees with the Manager, Sands Gold Coast Pty Ltd ACN 079743561 to enter into the Deed of Variation as circulated with this motion. The Body Corporate is authorised to enter into this Deed of Variation by affixing its common seal thereto under the signatures of two Committee members”.

It can be noted that the results of the poll for both motions is identical with 18015 lot entitlements in favour of the motions, 18360 lot entitlements against the motion and 3520 lot entitlements abstaining from voting on the motions.

The Applicant points out that the sum of the lot entitlements taken into account in respect of voting, 39895 (18015+18360+3520) does not correspond with the total of the lot entitlements of the lots that the minutes record as voting on the motions, which is 39780. I agree with the Applicant’s calculation of this discrepancy.

In the course of my investigation, the Body Corporate Manager for the scheme has provided me with the voting papers, and the particulars envelopes used for submitting the voting papers. I have compared the minutes of the meeting to the particulars envelopes. It is apparent that while Lot 20 is recorded in the minutes as having submitted a voting paper, there is no particulars envelope for Lot 20. Further, there is a particulars envelope for Lot 29, although the minutes do not record that a voting paper was submitted for Lot 29.

I am of the view that this is in all probability an innocent administrative error that occurred in the course of counting the votes, or preparing the minutes. The community management statement for the scheme indicates that Lot 20 has a lot entitlement of 685, and Lot 29 has a lot entitlement of 800.

For the purpose of enabling the conduct of a poll on motions, the lot entitlements were written on the back of the voting papers. I understand that the relevant lot entitlement for each lot was written on the back of each voting paper after the voting paper was removed from the envelope. Examining the actual voting papers it is evident that no voting paper has been allocated a lot entitlement of 685. Therefore it follows that in all likelihood, Lot 29, which did exercise a vote has been allocated with the correct lot entitlement of 800 for the purpose of the poll, and the error is limited to identification of voting papers received and recorded in the minutes of the meeting.

As a result, I am satisfied that the results of voting on motions 10 and 11 as recorded in the minutes of the meeting are correct.


3.3 Motions not included on the agenda for the meeting

The third main issue raised in the application concerns two motions that the Body Corporate considered and decided at the meeting, which had not appeared on the agenda for the meeting that was circulated to owners with the notice of annual general meeting. As I understand it, the Applicant argues that the failure to include these motions on the agenda and the voting paper for the meeting, which accompanied the notice of the meeting, constitutes a breach of section 52(5) of the Standard Module, and warrants the meeting being declared void for irregularity.

Section 52(5) of the Standard Module provides the following, quote-

(5) A general meeting may pass a resolution on a motion only if the

motion is—

(a) included as an item of business on the general meeting’s agenda; and

(b) stated in the voting papers accompanying the notice of the

meeting.

Section 42 of the Standard Module sets out the requirements of a notice of a general meeting, which include, an agenda for the meeting, and an accompanying voting paper “stating each motion to be considered at the meeting”.

While these provisions appear to require that all motions proposed for consideration at a general meeting must be described in the agenda and voting paper for the meeting, in my view, this requirement does not extend to procedural motions, which solely relate to the conduct of the meeting. I consider that this position is supported by section 47(1)(b) of the Standard Module which requires a person chairing a meeting to rule a motion out of order if the substance of the motion was not included on the agenda for the meeting, but makes an exception for “a procedural motion for the conduct of the meeting”. In my view, the legislation clearly contemplates that from time to time procedural motions will be necessary to control and conduct a meeting, and further, I consider that section 47(1)(b) described above evidences an intention that it is not necessary to include such procedural motions on the agenda of a general meeting.

Turning to the specifics of this case, the minutes of the meeting record the following statements concerning the first purported procedural motion:

“Mr Belcher opened the meeting at 12.44pm, noting a quorum was present and requesting that a motion be moved to adjourn the meeting for a period of one and a half hours to allow for the counting of votes and committee ballot. The Committee agreed to adjourn the meeting and to appoint Mrs Katrina O’Kane and Miss Tarina Brown of Ricmar (Qld) Pty Ltd act as scrutineers for the counting of votes or ballots.”

In my view a “procedural motion” is a motion, which goes to the conduct, progress or control of a meeting. I consider that a decision to adjourn the meeting to allow votes to be counted is an example of a motion designed to assist in the conduct of the meeting. I understand that there is an ability at common law for a person chairing a meeting to adjourn the meeting in certain circumstances, as well as an ability for the majority of persons able to vote at a meeting to resolve to adjourn a meeting. In this case, I am satisfied that the decision to adjourn the meeting for the purposes of counting votes was a procedural matter, and was not required to be included on the agenda of the annual general meeting.

The minutes of the meeting record the following statements concerning the second purported procedural motion:

“A motion was moved from the floor of the meeting that the voting papers and ballots be sealed in an envelope not to be opened unless specifically required by an order of an adjudicator. This would be immediately carried out upon the close of the meeting. The meeting agreed that these papers be sealed and stored with the Body Corporate files held at the office of the Ricmar (Qld) Pty Ltd.”

In my view this motion cannot be properly described as a procedural motion. As stated previously, I consider that the phrase “procedural motions” refers to motions that solely relate to the conduct of the meeting itself. In my view, what is being suggested above is a substantive matter concerning the dealing with, and access to, particular body corporate records, and is not an issue concerning the conducting of the meeting.

Further, in my view, it is arguable that the motion described above is contrary to the provisions of the Act. In my opinion it is clear that once submitted, a completed ballot paper or voting paper becomes a record of the Body Corporate. In this regard, section 148 includes these papers as “associated general meeting material” and section 149(1)(j) requires that these documents be retained by the Body Corporate subject to section 149(4), which allows for their disposal after 2 years.

Section 162 of the Act entitles an “interested person” to inspect or obtain copies of a body corporate record. “Interested persons” include the owners of lots included in the scheme. In my view the Body Corporate has no authority to pass a motion, which restricts a person’s ability to access documents that they are entitled to access pursuant to section 162 of the Act. For this reason, I consider that the decision to seal the ballot and voting papers until an Adjudicator orders otherwise is contrary to section 162, and therefore is invalid.

However, I do wish to state that in the circumstances I consider that this anomaly is somewhat minor, and certainly does not warrant an order invalidating the entire annual general meeting.

In this case the container holding voting papers and particulars envelopes has now been opened. I intend to return the voting papers and envelopes to the Body Corporate Manager where they should be made accessible to interested persons in accordance with section 162. In the circumstances, I do not consider that it is necessary for me to make an order on this issue.

4.	Conclusion

For the reasons set out above, I do not intend to make the order sought by the Applicant in this matter.