Kellys Beach Resort [2002] QBCCMCmr 505 (16 August 2002)

RA MeekREFERENCE: 0339-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	3642
Name of Scheme:	Kellys Beach Resort
Address of Scheme:	7 Trevors Road, BAGARA QLD 4670

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

Holmes-A-Count Pty Ltd as Trustee, the owner of lot 11



RA MeekI hereby order that the application by Holmes-A-Count Pty Ltd as Trustee, the owner of lot 11, for an order that the notice of EGM of the body corporate for Kelly’s Beach Resort CTS 3642 to be held on 21 June 2002 and dated 31 May 2002 be declared void for irregularity and that the body corporate be ordered to reissue the meeting notice to all lot owners, is dismissed.

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STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0339-2002

“Kellys Beach Resort” CTS 3642

The applicant Holmes-A-Count Pty Ltd as Trustee, the owner of lot 11, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

That the notice of EGM of the body corporate for Kelly’s Beach Resort CTS 3642 to be held on 21 June 2002 and dated 31 May 2002 be declared void for irregularity and that the body corporate be ordered to reissue the meeting notice to all lot owners.

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 alleges a number of irregularities in relation to the notice of meeting of an EGM called by the secretary and held on 21 June 2002 (the meeting). I intend to deal with each of these alleged irregularities in turn.

The applicable regulation module is the Accommodation Module and not the Standard Module as stated throughout the meeting notice.

The submission of the secretary of the body corporate, Beverly J McKinnon states that the BCCM form 5 was used “throughout the Notice”. This standard form refers to the Standard Module Regulation, the module applying to the majority of schemes. The secretary has failed to make necessary amendments. The secretary further states that –

In future all steps will be taken to ensure that the Accommodation Module only is mentioned in meeting notices.

In my view, the incorrect reference to the “standard module” was inadvertent. Further, I consider that no detriment has been established by this incorrect oversight. I am not prepared to invalidate the notice on the basis of this minor irregularity.

Section 41 of the Accommodation module has not been complied with in that 21 days notice of the meeting has not been given to lot owners.

The applicant alleges that as the notice was received on Monday 3 June, 2002, and the meeting was held on Friday 21 June 2002, “only 18 days notice has been given to lot owners”.

The secretary has provided evidence of postage of the notices on 31 May 2002, and states that she contacted the information service of this office regarding this aspect and that “it was confirmed that provided the Notice of meeting was posted on 31 May 2002, that section 41 ... would be complied with”.

The applicant has responded that “we do not believe that the office clerks who man the telephones in the Advisory Section have the power to grant such approval”, and if so, “it should have been in writing and enclosed in the meeting notice sent to lot owners”.

It is the role of information officers to give information on the legislation. They do not provide authorisations relative to requirements of the legislation. It is for an adjudicator, in the context of an application to determine whether the requisite period of notice, or other requirement, has been complied with, and if not, whether it is just and equitable in the circumstance to order in terms as sought by the applicant; in this instance, to invalidate the meeting on the basis of this alleged irregularity.

In a District Court appeal of an adjudicators order (4080 of 2000) Judge Boulton stated (at paragraph 27) that –

The very detailed provisions of the standard module regulation ... make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide.

In a Magistrates Court appeal of three orders of the Referee under the Building Units and Group Titles Act 1980, the Magistrate stated –

Non-compliance with a statutory requirement does not necessarily mean that all subsequent procedures are automatically invalid or unlawful (see Bunnings –v- Cross [1978] HCA 22; (1978) 52 ALJR 561). ...

It comes down to a question of whether it is unfair for the proprietors to allow those motions to stand because of the way they were included on the agenda of the meeting. ...

I do not believe that it has been shown that the way those motions were put to and passed by the general meeting where the proprietors had the opportunity to vote for or against the motions, operated unfairly against the interests or rights of the proprietors and for that reason I do not believe that the motions are, or should be declared, invalid.

I consider that the above two judicial statements provide a “test” or “standard” within which an adjudicator determines whether it is “just and equitable” to make an order in terms as sought by an applicant. The reference to “just and equitable” imply the exercise of a discretion on the part of an adjudicator in determining whether non-compliance, even if established, should be regarded as sufficient to invalidate a meeting, or other proceeding of the body corporate.

The legislation requires 21 days notice of meeting. In my view, 21 days should be read as “clear days” so that the date of the notice should proceed the date of the meeting by 21 clear days. On this basis, then the date of the notice (and the date of postage) should have been before 31 May, to allow a minimum of 21 clear days notice before the meeting, which was held on 21 June.

The applicant however is alleging a greater discrepancy. Namely that it should have had the notice for 21 clear days before the meeting. I do not agree with this interpretation. The current legislation was changed from the previous legislation which required 7 days notice. This 7 day notice period was interpreted in the manner suggested by the applicant. However, this period was found to be unworkable, particularly because of the vagrancies of overseas postal delivery services, where it was impossible to know a notice would reach an overseas owner and still allow the requisite 7 day notice period.

This led to the introduction of the 21 days notice requirement. The intention of the 21 day period was that it referred to the period between the date of the notice (and posting) and the date of the meeting; 21 days being deemed a sufficient period for the notice to get to any address worldwide.

I conclude that owners received 20 days notice of the meeting in question. I am satisfied that, whilst technically insufficient, this period of notice sufficiently complies with the requirements of the legislation. In particular, the applicant has not alleged any detriment suffered by it, or any other owner for that matter, in receiving the notice one day short of the legislative requirement. Nor is there any evidence to this effect. I refuse to invalidate the meeting on this basis.

Neither a lot owner nor the committee proposed the motions set out on the agenda and on the voting paper.

In the voting paper, the motions are stated as proposed by the committee. The applicant is alleging that there is no evidence of any committee meeting where the committee resolved to convene the meeting to consider the motions.

The submission of the secretary states that a flying minute was forwarded to all committee members together with a copy of correspondence received from the body corporate solicitor proposing the motion. A submission from committee member Lex Doust states that “it was a committee request that the meeting be called though this may not have been clearly stated but was certainly the case”.

The solicitor’s advice proposes that a motion regarding the appeal be put to a meeting of the body corporate. It then proposes a motion. I further note the content of minutes of a committee meeting held on 31 May 2002 by “flying minute”. There is nothing in those minutes which propose either that an EGM be convened, or which proposes motions to be included on the agenda of this meeting. Whilst I appreciate the committee appear to have been working to a tight time frame, adherence to required procedures should not be overlooked. The committee should have resolved that an EGM be convened, and should have resolved the nature of motions to be included on the agenda of that EGM. The committee did not do this.

The question is whether the notice of meeting should be ruled invalid for this reason. At this point, I consider it necessary to enquire into the politics of this dispute to some extent. Of the 4 motions resolved at the meeting, each motion had one vote against (the applicant). In contrast, motion 1 was carried by 21 votes in favour (9 of which were unfinancial) and motions 2, 3 and 4 were each carried by 27 votes in favour (14 of which were unfinancial). There can be no doubt that the overwhelming majority of owners have approved the body corporate’s intended course of action in respect of this matter, notwithstanding that technically the committee did not resolve to convene an EGM or resolve to propose certain motions to that EGM.

In contrast, the position of the applicant is contrary to the passing of the resolutions. Given this, it is in the applicant’s interests to have this meeting declared invalid, for whatever reason. I intend to take this wider context into account in determining this application.

Applying the test proposed by the Magistrate in the appeal referred to, namely whether it is unfair for the proprietors to allow those motions to stand because of the way they were included on the agenda of the meeting, I adopt the Magistrate’s statement that -

I do not believe that it has been shown that the way those motions were put to and passed by the general meeting where the proprietors had the opportunity to vote for or against the motions, operated unfairly against the interests or rights of the proprietors and for that reason I do not believe that the motions are, or should be declared, invalid.

I conclude that rather than being unfair to owners to allow the motions to stand, the contrary is in fact the case. It would be unfair to the majority of owners to invalidate the notice for the technical reason alleged, when clearly the majority of owners in general meeting have indicated how they wish the body corporate to proceed on this matter. I therefore decline to invalidate the notice for this reason. There would also be cost implications for the owners if this course of action was adopted.

Motion 1 of the notice seeks to confirm minutes of a meeting not yet held.

This is a typographical error.

Section 49(2) has not been complied with in that the “accompanying instructions and company nominee form set out in the meeting notice refer to the standard module regulation which will confuse lot owners who might wish to vote or complete the corporate owner representative form.

There is no evidence whatsoever that lot owners were confused.

Section 102(2) has not been complied with in Motion 2 in that at least two quotations for service providers has not been included in the meeting notice.

The applicant concludes that motion 2 should have been separated into three separate motions showing cost estimates for each service provider and at least two quotations for their engagement.

The secretary relies on the provisions of section 102(6), and argues that it was not practical to obtain 2 quotes. The secretary further states –

Mr Anthony Ryan of Payne Butler Lang, Lawyers, has been the Body Corporate’s solicitor throughout the application for Material Change of Use and it would not have been practical to obtain an alternative quotation considering the time restraints in the appeal process. ...

The applicant has replied that section 102(6) “cannot be relied on” and that “in Bundaberg there are 5 firms of solicitors who could have given a quotation”.

This office has often been required to consider the application of section 102 (or its equivalent, section 104 of the standard module) to the obtaining of quotes for legal services to be provided to a body corporate. It is a difficult question given the very uncertain nature of legal costs, and the difficulty to provide any firm quotation.

I am inclined to disagree with the applicant’s contention that the body corporate should have obtained a second quote for the provision of legal services to the body corporate. In particular, I am mindful that this matter is a continuing matter, and the solicitor presently engaged has had the carriage of the matter to date. There are very clear benefits to the body corporate of continuing with this firm of solicitors in this circumstance. One can easily foresee additional costs to the body corporate for another firm of solicitors coming up to speed so to speak in this matter. Moreover, a level of continuity in legal proceedings is important. In the circumstances, I accept the secretary’s assertion that it was not possible to obtain a second quote, at least for the solicitors engaged.

I therefore refuse to invalidate the notice for this reason, and accordingly, this application is dismissed.

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