Il Centro [2002] QBCCMCmr 638 (18 October 2002)

RA MeekREFERENCE: 0431-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	17438
Name of Scheme:	IL CENTRO
Address of Scheme:	30 Sheridan Street, CAIRNS QLD 4870

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

Anthony Clausen, a director of A&R Clausen Nominees Pty Ltd, the owner of lot 27



RA MeekI hereby order that the application by Anthony Clausen, a director of A&R Clausen Nominees Pty Ltd, the owner of lot 27, for an order that votes on motions put to the body corporate committee on 8/7/02 and 26/2/02 re legal costs, be declared invalid by five committee members directly or indirectly associated with Afinar Pty Ltd, is dismissed.

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STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0431-2002

“IL CENTRO” CTS 17438

The applicant Anthony Clausen, a director of A&R Clausen Nominees Pty Ltd, 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 -

That votes on motions put to the body corporate committee on 8/7/02 and 26/2/02 re legal costs, be declared invalid by five committee members directly or indirectly associated with Afinar Pty Ltd.

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 applicant, a committee member, seeks the invalidation of two committee resolutions. The first, of 26 February 2002, resolved that “the body corporate immediately engages Williams Graham Carman Solicitors to provide advice and assistance to the committee in relation to matters (the subject of application 0308 of 2002). The cost of these legal services are to be ratified at the next committee meeting ...”. The second, of 8 July 2002, resolved that the committee “ in response to the application ... now engages a solicitor to advise and prepare collectively on their behalf. Furthermore a budget of $1000 is to be allocated for the purpose of the legal fees in relation to this matter.”

The first motion was resolved in favour by 3 committee members (Jon Noonan, Barbara Jones and Warren Pitt) with the applicant against. The second motion was resolved in favour by 6 committee members (Noonan, Jones, Pitt, Z Glohe, G Busby, K King) with the applicant against.

The applicant is technically out of time under section 193 of the Act in seeking the invalidation of the first motion, given that the application was not made within three months of the date of the meeting. However I am prepared to consider its validity on the basis that the two motions are connected. Moreover, I note that members of the committee have not made any objection on the basis of section 193.

The applicant seeks invalidation of the two resolutions on the basis of a “clear case of vested interest” of all committee members excepting himself. The applicant refers to section 34 in this regard. The applicable regulation module for this scheme is the Accommodation Module, section 32 of which provides –

32 Conflict of interest [SM, s 34]
(1) A member of the committee must disclose to a meeting of the committee the member’s direct or indirect interest in an issue being considered, or about to be considered, by the committee if the interest could conflict with the appropriate performance of the member’s duties about the consideration of the issue.
(2) A member required under subsection (1) to disclose an issue must not, if the member is a voting member, vote on the issue.
(3) A person who holds the proxy of a member of the committee must disclose to a meeting of the committee the proxy holder’s direct or indirect interest in an issue being considered, or about to be considered, by the committee if the interest could conflict with the appropriate performance of
the proxy holder’s duties about the consideration of the issue.
(4) A proxy holder required under subsection (3) to disclose an issue must not vote as the proxy on the issue.
(5) A person who holds the proxy of a member of the committee must disclose to a meeting of the committee the member’s direct or indirect interest in an issue being considered, or about to be considered, by the committee if the proxy holder is aware that the member, if present, would
be required under subsection (2) not to vote on the issue.

The applicant further states that the body corporate chairperson, Noonan is a director of Afinar Pty Ltd and “has boasted to me that he controls five votes on the committee including nominees and associates”. The applicant alleges that the resolutions in question “related to the expenditure of funds on legal advice to respond to dispute ref. 0308-2002. As (this) dispute relates to an extension of management term, any vote on this matter by the ... committee members should be disallowed due to a clear case of vested interest”.

In additional material, the applicant further stated that –

• Jon Noonan is a director of Afinar.

• Warren Pitt is a nominee of Afinar.

• Barbara Jones is a former employee / associate of Afinar and remains a close associate.

• Z Glohe and K King are associates of Jon Noonan.

• Jon Noonan has stated to me in a telephone conversation that he controls 5 of the 7 committee votes.

The remaining committee members have made a submission opposing the application. Regarding the specific allegations, they state –

• Warren Pitt is not a nominee of Afinar Pty Ltd.

• Ken King, Zita Glohe, Graham Basby and Barbara Jones are not associates of Afinar Pty Ltd or it s directors under section 256.

• ...

• The chairman denies boasting that he controls the committee.

In part of his reply, the applicant has stated –

By “associates” I infer that they are “cohorts”, in the sense that they were elected to the committee at the behest of J. Noonan and by the canvassing of J. Noonan.

It appears to me that the applicant is seeking to rely on a number of legislative provisions interchangeably to establish a basis for invalidation. The concept of “associate” has no application to the provisions of section 32 dealing with “conflict of interest”. Rather, section 32 requires that a member’s “direct or indirect interest in an issue” be disclosed “if the interest could conflict with the appropriate performance of the member’s duties”. The consequence of there being a direct or indirect interest is that the member must not vote on the issue under consideration.

In contrast, the term “associate” is defined in section 256 of the Act. The relevance of “associate” is to various sections in the Act including –

• Section 11 – Eligibility for committee membership;

• Section 73 – Special provisions about proxy use;

• Section 86 – Associate supplying goods and services;

• Section 87 – Disclosure of associate contract;

• Section 105 – Audit.

The fact that the term “associate” is not used in section 32 dealing with “conflict of interest” is significant. In my view, it is intended that the concept is not relevant to the interpretation of this section. Rather, the relevant criteria is a direct or indirect interest in the issue being considered. The criteria is different from any form of association.

The applicant does not allege “interest” as a basis for invalidation of the motions; rather he alleges association. Association, even if established, is not a basis of invalidation of a motion. I intend to dismiss this application.

I will add that the applicant’s allegations of association are unsubstantiated in any event. They are simply that, allegations, which are denied by the committee members against whom the allegations are made. Should “association” have been a basis for invalidation of motions in the current context, I would have required substantiation of the allegations before making an order as sought by the applicant.

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