River Hills Court [2002] QBCCMCmr 719 (12 December 2002)

DJ ReardonREFERENCE: 0756-2002

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9729
Name of Scheme:	River Hills Court
Address of Scheme:	2A Cowper Avenue EAGLEBY QLD 4207

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

Kenneth Burnett and Margaret Burnett, the Owners of Lot 2


DJ ReardonI hereby order that pending final determination of this application, the “River Hills Court” Body Corporate 2nshall not implement, or otherwise carry out, any resolution regarding motion 3 as set out on the agenda of the extraordinary general meeting of the Body Corporate scheduled for 20 December 2002.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0756-2002

“River Hills Court” CTS 9729

1.	Orders sought

The Applicants, the Owners of Lot 2, have sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”) invalidating motion 3 as set out on the agenda for an extraordinary general meeting of the Body Corporate scheduled for 20 December 2002.

The Applicants have also sought an interim order that consideration of the motion by the Body Corporate be “put on hold”, pending a final determination of the application.

In accordance with section 225(1) of the Act, 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)).

The “River Hills Court” community titles scheme consists of 6 lots and common property. The community management statement for the scheme indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (“the Standard Module”) applies to the scheme.

2.	Matters in dispute

As stated previously, this application concerns motion 3 as set out on the agenda of the extraordinary general meeting scheduled for 20 December 2002. I have before me a copy of the notice of the extraordinary general meeting. The voting paper included with the notice describes motion 3 in the following terms:

Motion 3 THAT the Body Corporate engages Maunsell Pennington, Solicitors to act for the body corporate in recovering outstanding body corporate levies and any other monies owed to the body corporate. (Ordinary Resolution)

In the supporting grounds to the application, the Applicants state that the motion does not set out the proposed cost of engaging the Solicitors to recover outstanding contributions and other monies, and as a result the costs may exceed the limit for approval of expenditure by ordinary resolution of the body corporate.

3.	Interim orders

At this time, I am solely concerned with the application for an interim order. In any consideration of an application that seeks the making of an interim order, it is necessary to determine whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.

The examples included in the Act under section 225(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief.
Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances.

However, given that an interim order may be made ex parte (ie. without reference to, or submission from the respondent named in the matter), then as a guide, where the circumstances or matters in dispute include matters or allegations not capable of expeditious, and objective consideration, then the request for an interim order may be refused. It is a matter for an adjudicator to determine in respect of each application.

4.	Determination

I do not agree with the Applicants’ assertion that the cost of engaging solicitors for the purposes of debt recovery may result in the matter requiring the authority of the Body Corporate in the form of a special resolution, rather than an ordinary resolution. While the legislation requires particular matters to be authorised by special resolution, or resolution without dissent, in my view, the engagement of a solicitor to act for a body corporate to recover outstanding debts is a matter than may be decided by ordinary resolution, regardless of the cost. Note, that this should be contrasted to motions proposing that the Body Corporate commence a proceeding, which are covered by section 259 of the Act.

However, in making a decision on such a matter, the Body Corporate must ensure that it acts reasonably (in accordance with section 87(2) of the Act), and that it complies with the requirements of section 104 of the Standard Module in regards to any proposals involving spending above the relevant limit for major spending for the scheme. If a body corporate failed to meet these requirements in making a particular decision, an adjudicator could invalidate the decision, notwithstanding that the motion may have been passed by the required form of resolution.

In my view, the terms of motion 3 are quite broad, and I am uncertain as to the intended scope of the motion. For example, it is unclear to me whether the appointment of Maunsell Pennington Solicitors is intended to be restricted to the recovery of current outstanding debts, or whether the motion contemplates a continuing arrangement relating to debts that become outstanding in the future. In my view however, the more important uncertainty surrounds the cost of the engagement of the solicitors. I consider that section 104 of the Standard Module requires the proposer of the motion regarding the engagement of the solicitors to present at least 2 quotations to the members of the Body Corporate for consideration, if the cost of the engagement is likely to exceed the relevant limit for major spending for the scheme ($1200 in the case of the “River Hills Court” Body Corporate).

However, as stated above, at this time I am solely concerned with the application for an interim order. Before making any final determinations of the above issues, I consider that the application should be properly investigated, including by allowing affected persons to make a written submission about the application.

The Applicant has sought an interim order that motion 3 be “put on hold” pending a final determination of the application. In the circumstances, and on the basis of the material before me, I agree with this approach. If motion 3 is carried and implemented, it may be difficult for the Body Corporate to recover the cost of engaging the solicitors if it is ultimately decided that the original motion 3 was invalid. As such, while I intend to allow the Body Corporate to hold its meeting as scheduled and to consider and vote on the agenda items, I intend to issue an interim order preventing the Body Corporate from implementing any resolution it makes relating to motion 3, pending a final determination of this application.

This application will now be administered in accordance with the Act, and the usual procedures of this Office. The application will be finally determined in due course.

All parties should note the provisions of section 225(2) of the Act, which provides that -

An interim order -

a)	has effect for a period (not longer than 3 months) stated in the order; and
b)	may be extended, renewed or cancelled by the adjudicator until a final order is made; and
c)	may be cancelled by a later order made by the adjudicator; and
d)	if it does not lapse or is not cancelled earlier - lapses when a final order is made by the adjudicator.

All parties should be aware of this section and its effect on this interim order. In particular, the Applicant may need to request a renewal of the interim order, before a final order is made. The onus of renewing an interim order rests with the applicant. This office will not automatically renew an interim order.2y