Newhaven Villas [2003] QBCCMCmr 233 (20 November 2003)

Last Updated: 17 May 2005

REFERENCE: 0263-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20467
Name of Scheme:	Newhaven Villas
Address of Scheme:	73 Newhaven Street

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Geoffrey Curtis Castle & Jennifer Marion Davis Castle, the co-owners of lot 7

I hereby order that the AGM of the body corporate of Newhaven Villas purported held on 2 February 2003 is invalid and of no effect. I further order that the applicant by Geoffrey Curtis Castle & Jennifer Marion Davis Castle, the co-owners of lot 7, to have a professional body corporate manager appointed to the scheme, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0263-2003

"Newhaven Villas" CTS 20467

The applicants, Geoffrey Curtis Castle & Jennifer Marion Davis Castle, the co-owners of lot 7, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote –

I wish to have the general meeting dated 2/2/03 be declared invalid.

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 scheme

The scheme is a standard format plan (formerly a group title plan) of 10 lots situated at Pialba. The applicable regulation module for the scheme is the standard module.

Application and submissions

In their grounds, the applicants state –

I believe the committee of management to be incompetent. I want a professional manager to be appointed – someone who will manage our units according to the BCCM Act.

In their statement of grounds, the applicants further claim that committee members are acting "autonomously, without consultation of BCCM Act and its guidelines".

The applicants state –

The chairman, Mr Brian Short failed to send us an agenda or voting slips during our absence. The committee was notified in writing that we would be away at the time of the meeting, 2/2/03. We had submitted items for the agenda. Mr Short decided that "he would handle them (see minutes). This is only one of the many examples of the committee’s inept handling of business. ...

After receiving the application, this office sought submissions for all owners and the committee regarding the application. Submissions have been received from 4 of the remaining 9 owners and the body corporate committee. All submissions oppose the application, and support the position of the committee, and the body corporate generally.

The view is expressed in submissions that the dispute is wider than the terms of the application indicate. Other owners and the body corporate indicate that the dispute is more a consequence of the alleged behaviour of the applicant’s two dogs, for which conditional approval was granted by the body corporate and a third dog, which is allegedly being kept by the applicants without approval.

I will indicate at this point that I intend to restrict my determination to the two issues raised in the application; namely –

1. The validity of the general meeting of 2 February 2003; and
2. The requested appointment of a professional body corporate manager.

I intend to deal with these two issues in turn.

The validity of the general meeting of 2 February 2003

The applicants have made certain allegations concerning the validity of the AGM held on 29/9/02. As this meeting is not specifically the subject of the application, and the application is outside the time limitation of three months in which to bring an application concerning the validity of a meeting (section 242 of Act), I do not intend to consider the validity of the 29/9/02 AGM. In any event, this meeting was subsequently declared invalid. Relevantly, it is the meeting of 2/2/ 03 which is in issue. The applicant’s state –

As we would be absent from the general meeting of 2/2/03, we sent a letter to the committee asking for voting slips and agendas be sent to us. A copy of this letter, dated 16/12/02 is enclosed. We received no correspondence during our time away.

On our return 26/3/03 we asked Mr Short why we had received neither an agenda, voting slips nor minutes in relation to the 2/2/03 general meeting. He replied that there was really no issue on agenda requiring our vote. The minutes from that meeting show this to be incorrect. ...

The committee submission is a lengthy one, and consequently I do not intend to set it out in any detail. Much of the information is background in any event. Relevantly, at page 6 of the committee submission, it states –

A letter dated 16/12/02 was received from the Castles. Whilst the unit owners were advised of the meeting 2^nd February 2003 via the previous minutes of the November 2002 meeting an oversight in mailing out relevant meeting information meant that the Castles did not receive voting papers. The agenda for the meeting was presented at the time of meeting.

The committee believes Jenny Castle arrived unexpectedly at Brian Short’s door one evening in early April around 7 pm asking why no voting papers had been sent to her for the February meeting and why she had no minutes of that meeting. Brian Shot told Mrs Castle of the oversight ie. the committee had inadvertently overlooked the mailing out of voting slips and agenda on this occasion. ... the minutes of the meeting had not long been completed and would be distributed as soon as possible. ...

The committee refer to the matter as an "oversight" but I consider that the failure to provide an agenda and voting papers to all owners is much more serious than simply an oversight.

I have reproduced sections 42 to 45 of the standard module, which are pivotal sections outlining various requirements for both the notice of a general meeting, and also the agenda of that meeting. The importance of compliance with these sections cannot be overstated. They contain many of the requirements which ensure that all owners have an equal and fair say in the operation and management of their body corporate.

42 Notice of general meeting
(1) Written notice of a general meeting must be given to the owner of each lot included in the scheme, and if not given personally, must be sent to the owner at the owner’s address for service.
(2) The notice must state the time and place of the proposed general meeting.
(3) The notice of a proposed general meeting must--
(a) contain an agenda for the meeting; and
(b) be accompanied by--
(i) a proxy form; and
(ii) if the notice is given to the corporate owner of a lot--a form under which the lot owner may advise the body corporate of the corporate owner nominee; and
(c) be accompanied by a voting paper--
(i) stating each motion to be considered at the meeting and, if the motion is not proposed by the committee, stating the name and lot number of the person proposing the motion; and
(ii) stating for each motion whether a resolution without dissent, special resolution or ordinary resolution is required; and
(iii) enabling a person who is a voter for the general meeting to record a written vote on each motion to be considered at the meeting; and
(d) contain or be accompanied by explanatory or other materials required under this regulation to be contained in or to accompany the notice.10
(4) If all the lots have identical ownership, no notice of a general meeting need be given.

43 Time of general meetings
A general meeting must be held at least 21 days after notice of the meeting is given to lot owners.11

44 Place of general meetings
(1) A general meeting must be held not more than 15 km (measured in a straight line on a horizontal plane) from scheme land. ...

45 Agenda for general meeting
(1) The committee must prepare an agenda for each general meeting.
(2) The agenda must include--
(a) the substance of the following motions--
(i) motions the committee proposes for consideration at the meeting;
(ii) if the general meeting is a requested extraordinary general meeting--the motions proposed in the notice asking for the meeting;
(iii) a motion submitted under section 41 by a member of the body corporate and required to be included in the agenda;
(iv) if an adjudicator makes an order under the dispute resolution provisions authorising or requiring the calling of the general meeting to consider motions stated in the order--the motions stated in the order;
(v) if there has been a previous general meeting--a motion to confirm the minutes of the last meeting; and
(b) if the general meeting is the first annual general meeting for the scheme--the business required to be considered at the first annual general meeting.
(3) If the general meeting is an annual general meeting (other than the first annual general meeting), the agenda must also--
(a) provide for the presentation of the accounts for the financial year; and
(b) provide for the appointment of an auditor of the body corporate’s accounts for the next financial year or for a special resolution that the accounts are not to be audited; and
(c) provide for the approval of a budget for the financial year; and
(d) provide for fixing the contributions to be paid by the owners of lots for the financial year; and
(e) include other things that are, under the Act, required to be included on the agenda for the annual general meeting.
(4) If the lot owner seeking the inclusion of a motion under subsection (2)(a)(iii) supplies an explanatory note about the motion, and the note is not longer than 100 words, the note must accompany the agenda.

In particular, all owners must receive a notice of general meeting. The required notice period is 21days, including a period for receipt of the notice via post. The notice must include an agenda, a proxy form and a voting paper each containing all the requirements set out in section 42. The agenda must comply with the requirements set out in section 45. In particular, it must include all motions submitted by owners. In addition, it must provide for all the matters set out in sub-section (3).

When viewed against these clear and very detailed requirements, it is obvious that the body corporate’s oversight in failing to produce an agenda, to prepare a voting paper and to comply with the other various requirements is a serious failure to comply with the legislation. In effect, it denied the applicants a right to vote (by voting paper) at the meeting. This in my view is an oversight I cannot overlook.

I conclude that the meeting must be invalidated. Through the various failings of the committee, the applicants were denied the opportunity to have input into and to participate in voting at the AGM. Provided they are financial, then this is a basis right of every owner which cannot be disregarding. In the circumstances, I intend to invalidate the meeting. The irregularities in compliance with meeting procedures are simply too serious to overlook. The body corporate committee will need to seriously re-consider it procedures, particularly in respect of the convening of meetings, and ensure that in future all requirements of the legislation are complied with.

This is a useful introduction to the second order sought by the applicants.

The requested appointment of a professional body corporate manager

The minutes of the AGM states that –

Professional Body Corporate Management. All members present had examined the Summaries of five quotes and had given considerable thought to the matter. It was unanimously decided by those present that all were happy with matters as they stood as the cost would impose a financial burden on all owners. The officers would continue to be appointed from within the present ownership. This amounted to a considerable saving financially. The only absentee owner would had an input said she would be happy, with the majority outcome.

The applicants have commented beside this entry "What about us". It is correct that the applicants were not above to involve themselves in the voting process because of the failure of the body corporate to provide them with voting papers. Clearly, the applicants are in favour of the appointment of professional body corporate manager. However this does not mean that a manager should be appointed.

The standard module (section 87) provides that –

87 Authority to make engagement or give authorisation
(1) The body corporate may engage a person as a body corporate manager or service contractor, or authorise a person as a letting agent, only if--
(a) the engagement or authorisation is approved by ordinary resolution of the body corporate;17 and
(b) the terms of the engagement or authorisation are included in the material forwarded to members of the body corporate for the general meeting that considers the motion to approve the engagement or authorisation.
(2) If subsection (1) is not complied with, the engagement or authorisation is void.
(3) A body corporate may agree to the amendment of an engagement or authorisation mentioned in subsection (1) only if the amendment is approved by ordinary resolution of the body corporate.
(4) If subsection (3) is not complied with, the amendment of the engagement or authorisation is void.

It is relevant to note that it is the body corporate in general meeting, by ordinary resolution, which can appoint a body corporate manager. I do not consider it my role as an adjudicator to impose on owners a body corporate manager in circumstances which the majority of owners do not wish to appoint professional body corporate management.

There are procedures to be followed. Firstly competitive quotes must be obtained. The provisions of section 104 of the standard module may be relevant. A motion or motions must be included on the agenda, and finally, the motion must be approved by a majority of owners who choose to vote. This is the process by which a body corporate appoints a body corporate manager. I as an adjudicator will not override the wishes of a majority of owners and unilaterally appoint a professional body corporate manager. There is no requirement that schemes must appoint a professional manager, or that schemes must be professionally managed; it is totally a matter for owners to determine in general meeting.

As I have already commented on certain deficiencies on the part of the committee in the convening of the 2002 AGM, it is clear that the body corporate committee must improve its procedures and compliance with the legislation to a significant extent. How the body corporate achieves this level of compliance is a matter for it to determine.