Cairns Agincourt [2002] QBCCMCmr 56 (4 February 2002)

DJ ReardonREFERENCE: 0495-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	1043
Name of Scheme:	Cairns Agincourt
Address of Scheme:	69/73 Arlington Esplanade CLIFTON BEACH QLD 4879

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

David John Howell, the Owner of lot 27


DJ ReardonI hereby order that motion 3 considered at the annual general meeting of the Body Corporate for Cairns Agincourt community titles scheme 1043 held on 5 June 2001, should not have been ruled out of order, and the motion is carried.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0495-2001

“Cairns Agincourt” CTS 1043

1. Order Sought

The applicant, the Owner of Lot 27 has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997(“the Act”), quote-

“Motion 3 Should not have been ruled “Out of order” by the Chairperson after it had been carried at the AGM of the Body Corporate for CAIRNS AGINCOURT NO 1043 on 5/6/01.

The Body Corporate should implement the decision as carried.

YES 23 NO 16”

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)).

The community management statement for the Cairns Agincourt community titles scheme indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (“the Standard Module”) applies to the scheme.

2. Matters in dispute

This application concerns two motions (motions 2 and 3) considered by the body corporate at the annual general meeting of 5 June 2001. The minutes of the annual general meeting record motion 2 and 3 as follows:

“2. APPROVAL OF STATEMENT OF ACCOUNTS

That the audited Statement of Accounts for the Administration and Sinking Funds for the year ending 30 April 2001 be approved.

RESOLVED that Motion 2 be carried Yes 24 No 15 Abstain 0 Invalid 0”

“3. MANAGERS REIMBURSE BODY CORPORATE COST OF CAR PARK SWEEPER

That the Managers of Cairns Agincourt Apartments reimburse the Body Corporate an amount of $4,565.00 for the purchase of the car park sweeper which the Managers purchased and was subsequently paid for by the Body Corporate without Body Corporate approval.

Motion 3 (voted on before Motion 2) Yes 23 No 16 Abstain 0 Invalid 0

Note: As Motion 2 was carried there is a contradiction in that it gives retrospective approval for the purchase of the sweeper by the Body Corporate while Motion 3 requires the Managers to reimburse the cost.

RESOLVED that Motion 3 be ruled out of order.”

In this application, the applicant is seeking an order that motion 3 should not have been ruled out of order by the chairperson and that the body corporate should implement the decision as carried.

3. Ruling Motions out of Order

Section 47 of the Standard Module requires a person chairing a general meeting to rule a motion out of order in particular circumstances. This section provides the following:

47.(1) The person chairing a general meeting of the body corporate must

rule a motion out of order if—

(a) the motion, if carried, would conflict with the Act, this regulation

or the by-laws, or would be unlawful or unenforceable for

another reason; or

(b) except for a procedural motion for the conduct of the meeting, or

a motion to correct minutes—the substance of the motion was not

included in the agenda for the meeting.

(2) The person chairing the meeting must give reasons for ruling a

motion out of order and the reasons must be recorded in the minutes of the

meeting.

(3) The persons present and entitled to vote may reverse a ruling given

under subsection (1)(a) by passing an ordinary resolution disagreeing with

the ruling.

In making this order it is necessary to determine whether or not motion 3 fell within one of the categories outlined in section 47(1) of the Standard Module outlined above, such that the motion was properly ruled out of order.

4. Motion 3 would not normally be out of order

The minutes of the general meeting of 5 June 2001 record the chairperson’s reason for ruling motion 3 out of order as follows:

“As Motion 2 was carried there is a contradiction in that it gives retrospective approval for the purchase of the sweeper by the Body Corporate while Motion 3 requires the Managers to reimburse the cost”.

Section 47(1)(a) of the Standard Module outlined above, provides that a motion must be ruled out of order if the motion (if carried) would conflict with the Act, the Standard Module, the by-laws, or would be unlawful or unenforceable for another reason.

It appears that the chairperson considered that motion 3 was contradictory to motion 2, and as a result motion 3 became unenforceable if carried, and therefore should be ruled out of order. There does not appear to be a suggestion in the chairperson’s reasons for ruling the motion out of order that the motion conflicts with the Act, the Standard Module or is otherwise unlawful.

I disagree with the chairperson’s decision that motion 3 (if passed) is inconsistent with motion 2. Motion 2 relates to the approval of the audited statement of accounts for the year ending 30 April 2001. In my view, by approving statements of accounts, owners are not necessarily also approving particular items of expenditure reflected in the accounts that may or may not have been previously approved by the body corporate. Accounting records are intended to present information regarding the financial position of an entity. I consider that generally in approving a statement of accounts, owners are simply expressing satisfaction, that to their knowledge, the accounts properly represent the financial position of the body corporate at a particular date.

This position is consistent with the concept that a body corporate’s approval of a sinking fund or administrative fund budget does not form authority or approval for the actual expenditure on the items identified in the budget. Rather, when the time comes to meet expenses identified in the budget, the expenses must be separately considered and approved by the committee, or if necessary, the body corporate at a general meeting.

For this reason, I believe that it is perfectly acceptable and consistent for members of a body corporate to approve a statement of accounts, and in addition, consent to the body corporate seeking recovery for a particular item of expenditure identified in the income and expenditure statement.

Section 47(1)(b) requires motions to be ruled out of order if the substance of the motion was not included in the agenda for the meeting (except for procedural motions for the conduct of a meeting and motions to correct minutes). I have reviewed the notice of annual general meeting of 5 June 2001, and it is evident that the substance of motion 3 was included in the agenda for the meeting. As such, section 47(1)(b) is not applicable in this case.

As a result I do not consider that the substance of the motion itself is sufficient to warrant a decision that the motion is out of order. However, the matter is somewhat complicated by the chairperson’s letter to owners which accompanied the notice of general meeting of 5 June 2001 which I will consider below.

5. Effect of chairperson’s letter

I have been provided with a copy of a letter to owners from the chairperson which accompanied the notice of general meeting for 5 June 2001. In the letter the chairperson makes a number of comments regarding motions to be considered at the approaching general meeting. Of particular relevance in this application are the following comments:

“Motion2: Approval of statement of accounts

Normally we duly vote yes and move on to the next one. This time it is not that simple, Body Corporate Services has alerted us to one item on the accounts, namely the car park sweeper at a cost of $4565,00 While the sweeper was mentioned during a committee meeting the committee has not seen any quotes, or was asked for approval, no resolution was passed. In any event, the amount involved is over the limit of what the committee is allowed to approve. However, the Manager did authorize the expenditure and therefore it is now up to all unit owners to decide if this purchase has their approval.

Dealing with this motion, you can:

Vote YES to the accounts: you give retrospective approval for the purchased sweeper.

Vote NO to the accounts: it will be recorded that the sweeper was purchased without approval.

Whether you vote YES or NO there will be no disruption or damage the finances of the BC. But if the No vote gets a majority we will have to consider the Motion 3.

Motion 3: Managers reimburse Body Corporate cost of car park sweeper

This motion will only be relevant if the manager did not get retrospective approval. Owners will have to decide who will bear the cost of this unathorized purchase. The unit owners, who already paid, or the Manager, who will have to make reimbursement.”

The chairperson’s letter clearly sends a message to owners that a vote in favour of approving the statement of accounts is also a vote for approving (retrospectively) the purchase of the car park sweeper. For the reasons outlined previously, I disagree with this view. I also consider that it is a difficult and inefficient way of addressing the issues raised in the motions. For example, the approach described in the chairperson’s letter would mean that owners could not express their satisfaction that the accounts had been properly and accurately prepared, without fettering their legitimate rights to seek reimbursement for expenses they consider have been inappropriately or incorrectly incurred.

Despite my disagreement with the comments in the chairperson’s letter, I do feel it is necessary for me to consider the effect of these comments on voters with a view to deciding whether or not the motion should be invalidated due to any misunderstanding or confusion the comments may have caused.

If it is decided that owners accepted and kept the comments in the chairperson’s letter in mind when they exercised their votes in relation to motion 2 and 3, the results of voting have an absurd result. On the one hand, the majority of voters have approved the accounts (and therefore agreed to the purchase of the car park sweeper), but on the other hand the majority of owners also decided to seek recovery of the cost of the car park sweeper. It is important to note that the voting results were almost the same for both motions.

This is clearly an inconsistent, and unintended result of voting on motions 2 and 3, and somewhat supports the view that owners did not intend to provide retrospective approval for the purchase of the car park sweeper by approving the statement of accounts. I consider that this view is further supported by the nature of motions 2 and 3.

Motion 3 is a specific motion seeking recovery of the cost of the car park sweeper. Motion 2 is a more general provision, about which there is an implication from extrinsic material (the chairperson’s letter) of approval of a particular item of expenditure.

Generally, I consider it is preferable to interpret motions in accordance with the meaning that is clear from the actual wording of the motion, rather than implying a meaning to the motion that is not apparent from the motion itself. In this case, I am of the view that motion 3, which clearly seeks approval of the body corporate to recover the cost of the car park sweeper, should not be qualified by the more general motion 2 which in itself makes no reference to the car park sweeper.

As a further point, if the chairperson considered that there was an inconsistency between motions 2 and 3, I cannot see any real reason for preferring to decide that motion 3 was out of order, while motion 2 was valid, rather than motion 2 being considered invalid, particularly when motion 3 appears to have been considered and voted on before motion 2. While I am not suggesting that motion 2 is necessarily invalid, it seems arbitrary to rule the more specific motion 3 out of order while allowing motion 2 to stand.

For these reasons, I am not satisfied that the chairpersons letter warrants an order invalidating motion 3 as passed by the body corporate.

6. Conclusion

For the reasons outlined above, I consider that the chairperson should not have ruled motion 3 out of order at the annual general meeting of 5 June 2001.

In this order I have been solely concerned with the issue of whether or not the motion should have been ruled out of order, as this was the scope of the order that was sought by the applicant. While the resident unit manager has made comments regarding the reasonableness of the body corporate’s decision (for example, the resident unit manager makes comments regarding the committees involvement in the decision to purchase the car park sweeper), the body corporate has not properly addressed this issue. Before a decision can be made in regard to the reasonableness of the decision, I believe that both the body corporate and the resident unit manager must be given a full opportunity to provide information in support of their respective positions.

If a further dispute arises regarding the carrying out of motion 3, the parties could consider whether or not to make a further dispute resolution application to this office. In this respect, I refer the parties to section 182 of the Act which provides a definition of “dispute” in terms of the possible parties to disputes that can be resolved by this office.
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