The Anchorage - Mooloolaba [2003] QBCCMCmr 304 (23 December 2003)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Daryl Tenad-ii, the co-owner of lot 6

I hereby dismiss the application for an interim order that minutes and reference from 5 Dec 03 for expenditure be invalid.

I further order that the body corporate must not implement or otherwise act upon any of the resolutions passed at the extraordinary general meeting held on 4 December 2003, pending a determination of the final order to this application.

I further order that, until the determination of the final order to this application, the body corporate committee shall comprise those persons appointed at the extraordinary general meeting held on 4 December 2003.

I further order that the secretary shall forward a copy of this order and the statement of reasons to all owners of lots in The Anchorage – Mooloolaba within fourteen (14) days of the date of this order.

I further order that this interim order has effect for a period of three months from the date of this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0807-2003

"The Anchorage - Mooloolaba" CTS 5286

APPLICATION

This application was made by Daryl Tenad-ii, the co-owner of lot 6 (applicant) on 18 December 2003 under the Body Corporate and Community Management Act 1997 (Act). The applicant has sought a final order against the Body Corporate for The Anchorage – Mooloolaba (respondent) that "All minutes and reference dated 5 December be deemed invalid".

The applicant also seeks an interim order of an adjudicator that "Minutes and reference from 5 Dec 03 for expenditure be invalid with an interim order."

The Anchorage – Mooloolaba community titles scheme (The Anchorage – Mooloolaba) consists of 9 lots and common property. The community management statement for The Anchorage – Mooloolaba indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme.

PROCEDURAL MATTERS

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management ("the Commissioner") has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order being issued. In light of the circumstances, the Commissioner has referred the application to me notwithstanding that affected persons have not been given notice of the application, or afforded an opportunity to make submissions about the application (section 247(3)).

JURISDICTION

This is a matter which falls within the dispute resolution provisions of the legislation (see sections 227, 228, 276 and Schedule 5 of the Act).

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:

(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)).

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

MATTERS IN DISPUTE

From the material before me, I understand that this application concerns an extraordinary general meeting (EGM) held on 4 December 2003. Although the wording of the orders sought are somewhat unclear, and refer to 5 December and not 4 December, I am satisfied from the material provided that the applicant is seeking a final order to invalidate the 4 December 2003 meeting and an interim order to invalidate the resolutions regarding expenditure.

According to the information before me, the applicant was the chairperson from the last annual general meeting (AGM) on 28 July 2003 until he resigned on 3 December 2003. The co-owner of lot 6, Janet Tenad-ii, held the position of secretary/treasurer for the same period.

It appears that on or about 27 November 2003 the owner of lot 9, Alan Tudman, called an EGM for 4 December 2003. The applicant asserts that he was not aware of the meeting before it was called, and wrote to owners advising them of this on 27 November 2003. The applicant also states that he and his wife advised that they were unable to attend the meeting at such short notice but assert that Mr Tudman advised that the meeting would proceed regardless because it had been agreed to by four other owners. The applicant says that no agenda or voting papers were distributed, and asserts that a proxy form was provided, but that this only enabled proxies to be granted to Mr Tudman. The applicant has provided a copy of the minutes of the meeting, distributed on 5 December 2003.

Five owners were present at the meeting, and the proxies for three owners were present. The meeting apparently considered a number of significant matters. Following the resignation of the chairperson and secretary/treasurer (the applicant and his wife), the meeting appointed Alan Tudman as chair and Dianne Shand as secretary/treasurer. Four ordinary members of the committee were also apparently appointed. The meeting agreed to appoint a body corporate manager and accepted a tabled quote from Body Corporate Professionals, giving the chairman the authority to sign a contract with the body corporate manager.

In addition, a "Projected Expenditure for Maintenance 2004/2005" was tabled. It appears that this was not provided to owners prior to the meeting or, if it was, that it was amended before or after the meeting. This estimate lists some $75,300 items of work ($8,366.67 per unit), with the amounts for many items listed as "guesstimates". This expenditure was apparently approved, along with a special levy of $4,500 by 30 January 2004 and a further $4,500 by 30 April 2004. This special levy will raise some $5677.97 ($633.33 per owner) over and above the amount apparently required for the maintenance works.

The applicant appears to dispute the validity of the calling of the meeting (particularly without his prior knowledge), the projected expenditure and special levy, and the expenditure by the body corporate on exclusive use roof-top and deck areas, and also queries the scope and estimate for some other works. The applicant raised some of these concerns in a letter to Mr Tudman on 8 December 2003. The response dated 9 December 2003 indicates, in essence, that the vote taken at the meeting was a majority vote and that the vote stands.

DETERMINATION

Interim orders

At this time, I am primarily 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.
Section 279 of the Act provides for interim orders. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. In other words, it appears that the legislation contemplates that the main function of an interim order is to put an event or action (for example, a resolution of a meeting or a proposed improvement) "on hold" until the application is finally determined. Interim orders are not designed to be a mechanism to finally determine the substantive dispute between parties. 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.

The applicant has sought an interim order to invalidate the EGM resolutions regarding expenditure. It is not appropriate in the context of an interim order to finally determine the validity of a resolution or a meeting generally. However, in such circumstances it can be appropriate to order that the any disputed resolutions not be carried out until such time as submissions are sought and a final determination can be made. I will now consider the issues arising in this dispute to determine whether this is warranted in this case.

Applicable legislative provisions

The Body Corporate and Community Management Legislation Amendment Regulation (No.1) 2003 was approved in October 2003 with effect from 1 December 2003. This legislation has amended the Standard Module. The disputed meeting was called prior to 1 December but held after that date. Section 158 of the amended standard module sets out transitional provisions for meetings called but not held before the commencement of the amendments. It provides that the procedural step taken to call the meeting must comply with the regulation in force when that procedural step was taken, and the meeting must be conducted as if the amending regulation had not commenced. In other words, the 4 December 2003 meeting was required to be called and conducted in accordance with the Standard Module as in force before December 2003.

Meeting procedures

Under section 40(a) and (b) of the Standard Module a general meeting may be called by the secretary, or any other member of the committee authorised by the committee to call the meeting. While a member of the then committee (Alan Tudman) apparently called the meeting, it is not clear whether he was validly authorised by the committee to do so. Section 61 further provides for the calling of a requested EGM if a notice asking for the EGM is signed by or for at least 25% of all the lots included in the scheme and given to the secretary or (in the secretary’s absence, which can be deemed if the notice is given to the secretary’s address for service and no response is received within 7 days) the chairman. There is some suggestion that this was a requested EGM, but it is not apparent that any request was given to the then secretary or (in her absence) the then chairman.

Section 43 states that a general meeting must be held at least 21 days after the notice of meeting is given to lot owners (excluding the date that the notice was sent and the date of the meeting). Section 61(3) further provides that a requested EGM must be called and held within 6 weeks of receipt of a valid notice requesting the meeting. I have not been given a copy of any formal notice of meeting, but it appears that the applicant was notified of the meeting on 27 November 2003, only six days before the meeting was conducted.
Section 42 of the Standard Module prescribes the form and content of a notice of meeting (including an agenda, proxy forms and voting papers), and section 52(5) provides that a general meeting may not pass a resolution on a motion that was not included on the meeting’s agenda and voting papers accompanying the notice of meeting. The applicant asserts that there was no agenda or voting papers for the disputed meeting.

There are other potential issues arising regarding proxies and the motions considered, but I do not consider it necessary to outline these matters here. On the face of the material provided, there are potentially numerous and substantial procedural irregularities in the calling and conduct of this EGM. It is neither necessary nor appropriate for me to finally determine these issues conclusively in the context of an interim order, given that the committee and owners have not yet had proper notice of the application or an opportunity to make a submission about the application.

Conclusion

I consider that there is a prima facie case that the meeting was not called or conducted within the requirements of the Act. In the circumstances, I am satisfied that the nature and urgency of the matters raised in this application warrant consideration of an interim order. Moreover, I am satisfied that it is appropriate to dispense with the requirement to seek submissions from interested parties (under section 247 of the Act). In considering the appropriateness of calling submissions, I have assessed the likelihood that submissions at this stage would alter the approach I have taken in this order, and note that, with the Christmas period, the provision of a meaningful submissions period may result in a delay of some weeks before an interim order would be made.

The resolutions purportedly passed at the meeting may be acted upon at any time. The applicant indicates that some works could be undertaken on 23 or 24 December 2003. I am concerned that the respondent body corporate may be put to expense and inconvenience if those resolutions were acted upon and then were ultimately invalidated. I am particularly concerned about the impact if the body corporate engaged contractors to undertake works purportedly approved at the EGM, and if owners paid the special levy. The disputed meeting also resolved to appoint a body corporate manager, however it appears from the material that this appointment may have already been effected.

In the circumstances, I consider that the applicant has raised sufficient basis regarding the validity of this meeting to warrant an interim order restricting the Body Corporate from carrying out the resolutions purportedly passed at the extraordinary general meeting until such time as a final determination is made regarding this application. I have ordered accordingly. However, to enable the body corporate to progress day-to-day business, and given the resignation of the previous executive committee members, I have ordered that the committee as appointed at the 4 December 2003 meeting shall remain as the committee until the application is finally determined.

The matter will now be investigated in accordance with the usual processes undertaken by this Office, including calling of submissions from all affected parties. A final order to the application will be made in due course.

All parties should note the provisions of section 279(2) of the Act, which provides that:

(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and

(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or

(iii) a final order is made by an adjudicator to whom the application is referred."

In my order I have provided that the interim order has effect for a period of three months. All parties should be aware of this section and its effect on the interim order. In particular, it is the responsibility of the applicant to request an extension to the interim order period should it become necessary, as this office will not automatically renew an interim order.2n

Number of Scheme:	5286
Name of Scheme:	The Anchorage - Mooloolaba
Address of Scheme:	13-15 Bindaree Cresent MOOLOOLABA QLD 4557

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

The Anchorage - Mooloolaba [2003] QBCCMCmr 304 (23 December 2003)