The Rocks Resort [2003] QBCCMCmr 2 (2 July 2003)

Last Updated: 17 May 2005

REFERENCE: 0781-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9435
Name of Scheme:	The Rocks Resort
Address of Scheme:	828 Pacific Parade CURRUMBIN QLD 4223

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Kenneth Richard Garrard, a director of Mindset Management Pty Ltd, the owner of lot 52

I hereby order that the application by Kenneth Richard Garrard, a director of Mindset Management Pty Ltd, the owner of lot 45, for an order to invalidate the resolutions of the body corporate with regard to motions 11, 12, 13 and 15 at the AGM of the body corporate held on16 December 2002, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0781-2002

"The Rocks Resort" CTS 9435

The applicant, Kenneth Richard Garrard, a director of Mindset Management Pty Ltd, the owner of lot 45, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

To invalidate the resolution of the body corporate with regard to motions 11, 12, 13 and 15 at todays (16 December 2002) AGM of the body corporate.

The Applicant also sought an interim order of an adjudicator to place on hold the resolution of the body corporate with regard to motions 11, 12, 13 and 15 at the AGM held on 16^th December 2002. This application was dismissed for the reasons set out in the interim order made on 19 December 2002.

Section 276(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 contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The applicant’s originating material was scant on detail. I commented to this effect in my reasons for dismissing the application for an interim order, and invited the applicant to -

... provide to this office a statement complying with the requirement of an applicant under section 192(1)(e) ie. state in details the grounds on which the order is sought. ...

In the initial grounds, the applicant referred to a change in "office hours" in the proposed replacement letting agreement, and noted a statement in the explanatory notes to the relevant motion which appeared to contradict this in stating that the office hours remain unchanged. The applicant concluded his grounds with –

This is a material change of service level that we believe will significantly change the vote of the owners.

Motions 12 and 13 are affected by the committee’s advice on motion 11 in that they relate to contracts for associated services.

The advice of the chairman with regard to motion 15 and included with the Notice Of AGM was inappropriate, was not impartial, did not apparently represent the majority view, and was designed to improperly influence the votes of the owners.

Further the proxy voting forms used at the meeting were incorrectly dated as "16^th December 2003".

The applicant did submit additional material by way of a "statement complying with the requirement of an applicant under section 192 ...". In this material, the applicant alleges that in respect of motion 11, the motion included a note that –

The committee notes that the proposed contracts are unchanged in content, with the exception of the term of the agreement.

The notes then further state –

The duties specified in the proposed agreements are unchanged, as are the office hours.

The applicant then states –

The contract that was to be replaced by motion 11 ... clearly states the office hours to be :
8:30 am to 5:00 pm Monday to Friday
9:00 am to 12:00 pm on Saturday and Sunday

The applicant alleges that the office hours under the new contract the subject of motion 11 have in fact been changed in that:

• The weekday hours have been shortened by half an hour; and
• The office hours for Sunday have been eliminated completely.

The applicant concludes that he believes this to be a material change that was not disclosed to the owners prior to or at the AGM and which "would alter the views of the owners and would have resulted in a change in the proxy vote arrangements and therefore the result of the vote for motion 11 at the meeting".

This office sought submissions from the committee regarding this application. It did not extend submissions to include all owners since this office had previously sought submissions from all owners in respect of two other applications (0757 and 0760 of 2002) which sought similar orders to the current application. The cost to the body corporate of seeking submissions from all owners (in this scheme there are 124 lots) is a relevant consideration. I have however reviewed all materials, including submissions, on the other two applications mentioned with the view to assessing the views of owners as expressed in those submissions, though I do acknowledge that those applications do involve somewhat different considerations. I further acknowledge receiving a submission from one potentially affected owner; namely Joel Peterson, "the owner of lot 6 and Peterson Management Services Pty Ltd as trustee for the Peterson Family Trust, the service contractor and letting agent for the scheme". Both the committee submission and the Peterson submission oppose the orders being sought.

It is relevant to note that motion 11 dealt with the renewal of both the caretaking and letting agreements. The allegations relate only to the letting agreement, although it is relevant to the submissions of those parties opposing the application that the both the caretaking and letting agreements are held by the same entity, Peterson Management Services Pty Ltd (PMS).

The applicant is incorrect in its allegation regarding the hours under the original agreement. What the original clause actually stated is –

To keep the reception desk staffed between the hours of 8.30 am and 5.00 pm Monday to Friday or at such other time or times as shall be mutually agreed upon between the Agent and the Body Corporate PROVIDED HOWEVER that the agent or its employee or agent ... shall be in attendance at the building from 8.30 am to 5.00 pm Monday to Friday and 9.00 am to 12.00 pm Saturday and Sunday PROVIDED FURTHER that the agent or its employee or agent ... shall be available in the building outside such hours in the event of an emergency.

This is materially different from what the applicant alleges the original office hours to be. Further, for completeness, what the new agreement provides is that –

The letting agent will ... maintain and staff the designated reception area during the following hours, excluding public holidays:
Monday to Friday 9:00 am to 5:00 pm
Saturday – 9:00 am to 11:30 am.

Both the committee and Peterson point out that the new agreement in fact provides for an increase in office opening hours for the letting manager to include Saturday mornings. The point being that the original agreement did not provide that the office be opening Saturdays or Sundays but only that the manager or agent be in attendance at the building.

The applicant’s allegation does not acknowledge this point. I conclude that the applicant misrepresents the material to this extent, and in doing so, fails to acknowledge that the Saturday morning opening. In net terms, the opening hours over a week remain the same with the reduction of opening hours per day of half an hour being made up by the opening of the office for two and a half hours each Saturday morning. On the reduction of the Monday to Friday opening hours, I conclude that the reduction by half an hour each day will have no appreciable impact on service delivery.

Further, on the issue of the agent being in attendance at the building, the other parties argue that two provisions are relevant to a consideration of this issue. The first is the requirement of the new letting agreement for the Letting Agent to "use reasonable endeavours to improve and expand the letting of lots and to act at all times to further the interests of the body corporate and the owners". The parties point out that this clause imposes an obligation on the letting agent to always act in the interest of the body corporate generally, and the owners of lots who chose to let through the letting agent in particular.

Secondly, the other parties point out that the new caretaking agreement requires the caretaker or its nominee to be contactable by mobile phone outside such hours in the event of an emergency. The implication being that "it was considered unnecessary to impose an obligation in the Letting Agreement in this regard. The manager is already compelled under the Caretaking Agreement to be so contactable".

I acknowledge that the caretaking and letting agreements are currently held by the same entity, and that it is very unlikely that such agreements would ever be held by different entities at the same time, unless the entities were in fact related or associated entities.


There is a further relevant consideration in my view. The changes, even subject to the comments above, are to the letting agreement and not the caretaking agreement. The implications of this for the body corporate are significantly different. The caretaking agreement directly affects the body corporate and all owners, and the caretaker is paid a fee by the body corporate for the services provided. In contrast, the letting agreement only affects owners who choose to let their lots through the letting agent, and the letting agent receives no payment from the body corporate.
I conclude that the applicant has not established its allegation that the changes to the letting agreement "is a material change of service level". Moreover, the applicant has not evidenced its allegation that "this material change would alter the views of the owners and would have resulted in a change in the proxy vote arrangements and therefore the result of the vote for motion 11 at the meeting". The applicant provides no basis to substantiate this statement and I cannot conceive how proxy votes arrangements would be altered in consequence of the matters alleged. I further conclude that the committee notes accompanying the motion are not misleading in any material respect.

The applicant next alleges that –

Motions 12 and 13 put in place agreements for associated services from the same supplier as that under motion 11. Motions 12 and 13 are therefore dependant on the advice provided by the committee of the body corporate under motion 11 ... Since the advice is materially incorrect the applicant believes the owners views would be changed by the knowledge and would have resulted in a change in the proxy vote arrangements and therefore the result of the vote for motions 12 and 13 at the meeting.

For the reasons set out above, this argument regarding motions 12 and 13 is not substantiated, and I am not prepared to consider it further.

In respect of motion 15, the applicant alleges that –

Motion 15 was proposed by Mr Kenneth Jarvis, a member of the committee, on the basis of having found fault with the current body corporate management company. The applicant believes the advice of the chairperson to have been inappropriate, partial, did not represent the view of the committee, and was improperly designed to influence the votes of the owners.

As per the agenda of the meeting, it was stated under Motion 15 that –

The chairman advises that neither he nor the committee has found fault with the current body corporate management company, Gold Coast Body Corporate Specialists, nor have they received notification from any owners that there is any deficiency in the service supplied to the body corporate by Gold Coast Body Corporate Specialists.

The chairman further advises that the committee has had no opportunity to do any due diligence checking into the body corporate management company proposed by this motion, and the cost implication to the body corporate. This company submitted a proposal for body corporate management at the AGM of 1989, but it was rejected due to cost considerations.

On the specific question of whether the comments reflected the view or position of the committee, I have been provided with a copy of a flying minute that approved the comments to be added to the agenda. On its face, I am satisfied that the comments were authorised by the committee. I further, conclude that on their face, the comments do not appear to me to be sufficient to warrant a conclusion of impartiality or of being improperly designed to influence the votes of owners.

Subject to making these observations which I consider necessary for the purposes of my determining this aspect of this application, I do not propose to comment or investigate further, for two reasons. Firstly, the allegation is more specifically made in application 0760 of 2002, in respect of which submissions from all owners were invited. I conclude that it is more appropriate that a determination regarding this allegation be made the subject of that application, both for the reasons that the allegation is canvassed in greater detail in that application, and further, that all owners have had the opportunity to make submission in response to the allegation. For these reasons, I point out that my above conclusions are preliminary only, and made on the material at their face value. I do not intend my comments to bind or in any way influence the determination of another adjudicator determining application 0760 of 2002.

Finally, the final allegation regarding an incorrect date on proxy voting forms is inconsequential in my view.