Stratford Gardens [2003] QBCCMCmr 374 (11 February 2003)

Last Updated: 7 September 2007

REFERENCE: 0506-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	18693
Name of Scheme:	Stratford Gardens
Address of Scheme:	6-10 Holmes Street STRATFORD QLD 4870

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

Garry Leslie WERREN, as the owner of Lot 6,



I hereby order that the resolutions purported to have been passed in respect of Motions 5 to 10 inclusive at the annual general meeting held on 2 September 2002, were at all times void and therefore are of no force or effect.

I further order that –

1. Craig Armstrong of Cairns Body Corporate Management Pty Ltd, 242 Sheridan Street, Cairns Qld 4870 (PO Box 4731), is appointed Administrator ("the Administrator") to the Body Corporate for "Stratford Gardens" CTS 18693 with all of the powers of chairperson, secretary, treasurer and of the committee, and as Administrator –

(a) will hold the appointment for the period beginning from the date of this order until the close of the annual general meeting ("the meeting") required under the legislation to be held between 1 March 2004 and 31 May 2004;

(b) will hold those powers exclusively for the period of administration;

(c) cannot delegate those powers to any other person;

(d) must, under the authority of this order, make arrangements to be the sole signatory for all bank and other financial institution accounts of the body corporate for the period; and

(e) shall be paid remuneration by the body corporate at the rate of $154 per lot per annum (inclusive of GST) on a pro rata basis, with disbursements and fees for additional services in accordance with those rates set out in the attached standard Administration Agreement for Cairns Body Corporate Management Pty Ltd.

2. In consequence of part 1(b) of the order above –

(f) the powers of all members of the body corporate committee and of the committee itself, are by this order withdrawn, and all rights and responsibilities given under the Act and the community management statement to members and the committee reside solely with the Administrator; and

(g) committee members will next be elected at the annual general meeting to be held as referred to in part 1(a) above, and they will only assume office with their respective powers under the legislation, after the close of the meeting.

I further order that David Spizick, paid chairperson and treasurer, and Terry Mettman, secretary and owner of Lot 4, must –

(1)

within two (2) weeks of the date of this order make available for collection by the Administrator, or his agent, all of the records and assets of the body corporate held by them or under their control, including but not limited to: all bank statements; bank accounts; accounting and other financial records; common seal; roll; minutes of general meetings and committee meetings; insurance policies and general correspondence.

(2)	co-operate with the Administrator in all matters relating to the body corporate, including giving explanations or information concerning the body corporate records, past actions of the body corporate and committee, and any matters in progress.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0506-2002

"Stratford Gardens" CTS 18693

This is the final order to an application by Garry Werren of Lot 6 for the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") –

1. That the AGM foreshadowed for 02.09.02 be declared invalid and all determinations be deemed null and void.

2. That an independent (impartial) person be appointed to chair an AGM and future meetings of Stratford Gardens Body Corporate.

3. That the present Manager/Chair’s conduct be investigated in regard to misrepresenting the Stratford Gardens Body Corporate with respect to filing action in the Magistrate’s Court on our collective behalf without the formal sanction required at a Body Corporate meeting.

4. That professional Body Corporate managers be appointed in the interim to conduct the affairs of Stratford Gardens Body Corporate and that the Body Corporate’s books be audited to reflect the current situation.

5. That the Committee be instructed to enforce the Body Corporate By-laws in regard to the keeping of a dog by the owners of Lot 2.

The applicant also sought an interim order in the matter and the following Interim Order 506-2002 was issued on 9 September 2002 –

I hereby order that the application for an interim order that the annual general meeting to be held on 2 September 2002 not proceed until a final order is made on this application, is dismissed.

JURISDICTION:

This is a dispute between an owner, the applicant Werren of Lot 6, and the body corporate, the respondent, concerning: the validity of a general meeting; the failure of the committee to include submitted motions in a meeting agenda: the correctness of the chairperson having filed a court action without body corporate authority; and the failure of the committee to enforce a by-law against an animal being kept on the scheme (Lot 2). These are matters that come within the dispute resolution provisions of the legislation (see sections 182, 183 and 223 of the Act).

General powers of an adjudicator in making an order:

Section 223(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 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) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1) of the Act).


APPLICATION AND SUBMISSIONS:
Under section 194 of the Act, a copy of the application was sent to the respondent body corporate (committee), the owner of Lot 2 (Ersfelds) as an affected party, and to all other owners, with an invitation for each to respond to the application. Submissions were received from the committee and the owners of Lots 1, 2 and 4. These submissions were subsequently viewed by the applicant who then lodged a written reply in answer to the matters raised in them.

The applicant has submitted grounds in support of the various orders sought. Three of the orders sought relate to particular matters, namely the validity of the recently held annual general meeting, the filing of an action against a neighbour over a perimeter fence, and the keeping of a dog on Lot 2. The remaining two, and the others to the extent that they are symptomatic of the problem, constitute a general dispute regarding the present administration of the body corporate.

Although the applicant has not sought the appointment of an Administrator as such, both Order 2 seeking an independent person to chair future meetings, and Order 4 seeking the appointment of a professional Body Corporate Manager to conduct the affairs of the body corporate, refer to key tasks which are inherent to this role. The appointment of an Administrator to a body corporate is specifically provided for in the legislation (see sections 223(3)(v), (4) and 248 of the Act).

Under the following heading "Determination", I will address each of the particular issues raised in the application, as well as address the scheme situation generally.


DETERMINATION:

Having regard to the following documents: the application and the supporting grounds, including the attached copies of letters, notices and other documents; the submissions of owners; the reply by the applicant; and certain matters disclosed in previous applications to this office, for the reasons given below I am of the opinion that it is in the best interests of all owners that I appoint an Administrator to the body corporate.

Having earlier formed this opinion; on 29 January 2002 I conducted a teleconference with Garry Werren, the applicant owner, and David Spizick, representing the respondent body corporate (as the paid chairperson and treasurer). The purpose of the teleconference was to inform the parties of my decision, to briefly give my reasons for that decision, and to request that the applicant and other owners should advise me of the names of their first and second preference appointees for the position. I also informed the parties that the appointee would need to be a professional Body Corporate Manager. I did say that, given the scheme’s voting history of two opposing factions of three owners each, each "faction" could facilitate the process by collectively choosing their preferential appointees. I will return to the outcome of this process after giving my reasons for the appointment of an Administrator.

Firstly, this scheme has had an unhappy history of ill feeling and factionalism between owners over the past few years. This appears to be the result of arguments over: committee and general meeting procedures (eg committee meetings not notified to owners; insufficient minutes; incorrect apportionment of contributions; determination of voting eligibility, etc); the perceived bias of David Spizick engaged as paid chairperson/treasurer, who is the personal friend of one of the owners (that owner is of the faction comprising Lots 1, 2 and 4 which enjoys the majority voting power by virtue of the larger lot entitlement attaching to Lot 1); the hostility between the applicant and another owner resulting in an assault; the aggressive nature of the applicant; the police attending a noisy party in Lot 2 upon the complaint of the owner; and noise problems caused by a dog being kept on Lot 2 without proper authority; and other matters.

It is fair that I also mention here that Spizick denies any bias, and says that the applicant initially voted in favour of his chairmanship despite knowing of his friendship with an owner. Also, other owners imply that it is the applicant who is doing the bullying, deceiving or misrepresenting.

While it is difficult to determine the truth in a mood of claim and counterclaim, there can be no denying that there is a general antagonism between the factions that has existed for some time and is not abating. I have read the reasons of my fellow adjudicators to orders made in respect of previous applications, namely 510-1999 of 2 December 1999, 287-2000 of 25 October 2000, and 333-2001 of 31 August 2001, and they clearly document this history of ongoing administrative problems and personal conflict.

While I would not have appointed an Administrator without the other reasons that follow, the appointment of an impartial, professional Body Corporate Manager with a proper knowledge of the legislation, will nevertheless counter the accusations of bias and provide a circuit-breaker for the continuing antagonism that makes productive meetings in this scheme difficult if not impossible.

Secondly, the three motions submitted by the applicant for the meeting of 2 September 2002 (hereafter "the meeting") were not reproduced in the voting papers. The first motion, for the appointment of a particular Body Corporate Manager (Cairns Body Corporate Management Pty Ltd) including details of the term and delegated powers and comprising some 10 lines of text, was reduced to the following motion in the voting paper –

That the affairs of Stratford Gardens be placed in the hands of a professional Body Corporate Manager.

Section 41 of the Standard Module provides that an owner may submit a motion for inclusion on the agenda of the next general meeting, and section 42 requires that all motions (committee and owner) must be stated in the voting paper. The legislation, as one would expect, does not allow the committee to modify or reduce a motion. Motion 1 should have been included in the voting paper as it was submitted. The motion put to the meeting is not the applicant’s, it is a general one which, even if passed, would not have achieved the intention of the applicant.

In regard to the further two motions submitted, these were excluded from the agenda (and therefore the voting paper) because, in the view of the committee, they were procedural arrangements to be carried out only if Motion 1 (Body Corp Management) is passed. The motions were conditional upon the passing of the appointment motion, nevertheless motions must be reproduced as submitted and it is a matter for the chairperson at the meeting to decide whether they should be ruled out of order for a lawful reason (see section 47 of the Standard Module).

Apart from this, section 42(3)(c)(i) of the Standard Module requires that the name of the person proposing the motion, and their lot number, must be shown on the voting paper, and this was not done.

Thirdly, the agenda and voting paper for the meeting, and the subsequent minutes, disclose other errors, some more serious than others, in the administration of the body corporate.

The legislation provides that the substance of a motion may be shown in the agenda, but the proper motion must be shown in the voting paper. The voting paper does not show motions but largely repeats the agenda short-form description - in a number of instances, the minutes show resolutions that are not in the voting paper. For example, Motion 8 is shown in the voting paper as "Pergola in front and back", and Motion 9 states "Changing house windows"; there is no reference to the lots the motions refer to. However, the subsequent resolution to Motion 8 gives approval for the erection of pergolas on specific lots, namely Lots 2 and 3, despite no such reference in the motion. The resolution to Motion 9 states "Motioned, seconded and passed at the individual’s expense; subject to council and body corporate approval of plans". The motion is meaningless to a party that was not present at the meeting when other discussions obviously took place – but resolutions must be comprehensive and specific to constitute the proper authority and historical record they must be. Likewise, motions must be comprehensive and specific to allow for absentee voting – motions such as "Pergola in front and back" and "Changing house windows" are so general as to be meaningless and not motions at all.

Motion 10 is shown as "Painting of houses" in both the agenda and voting paper. This relates to the painting of lot buildings, as confirmed by Spizick in the teleconference. The intention of this motion is clearly in contravention of the Act. "Stratford Gardens" was registered as a group titles plan on 29 January 1988, and is now termed a "standard format plan" under the new legislation. It is a subdivision of property and owners own both the land under their lot building and the land to the boundaries of their lots. The body corporate in such a scheme as this may make certain by-laws concerning the use and enjoyment of lots, but it cannot resolve to interfere with the private maintenance duties of owners (see section 120 of the Standard Module). That is, owners must themselves maintain their lots, including the painting of their lot building. There is the ability for a body corporate to offer an arrangement under section 119 of the Standard Module to owners for a contractor to carry out certain maintenance work, such as painting their lot buildings, but it is entirely a voluntary arrangement which owners may accept or reject at their option. This is not such a motion but one attempting to unlawfully impose a maintenance contract on owners, and as such the motion is beyond the power of the body corporate.

Motion 12 is merely a repetition of what is already the duty of the body corporate under section 87(1)(b) of the Act – "The body corporate for a community titles scheme must enforce the community management statement (including the by-laws affecting the common property)". As such it merely repeats a present statutory duty, for no purpose. From my reading of the documents, the applicant has requested the committee to take an action against a specific dog kept in alleged breach of the relevant animal by-law.

Motion 13 is for the committee election to be decided by open ballot. Section 12(2) of the Standard Module provides that an election must be by secret ballot unless the body corporate resolves otherwise. This was a new provision which commenced with the new legislation in July 1997 – it required bodies corporate to pass such a resolution if it did not wish to have secret ballots, but it was only necessary to be decided once. The legislation provides that, whether the ballot is to be secret or not, ballot papers showing the candidates for each of the executive and ordinary membership positions must be distributed to owners with the notice of the annual general meeting. I cannot see that was done here – the candidates have been merely listed out at the end of the agenda. Section 17 of the Standard Module sets out how the ballots of candidates for separate contested positions, are to be prepared. Ballot papers are designed to give the same opportunity to owners to vote for the committee as the voting paper does for motions.

There are other matters -

• the statutory audit motion under section 45 (3)(b) of the Standard Motion has not been included.

• the financial accounts show a transfer ("subsidy") of moneys from the administrative fund to the sinking fund. There is no provision for the switching of funds – any fund excess must be resolved by a reduction in contributions in the following year. Sinking Fund moneys are determined and levied to meet specific future expenditures (see section 94 of the Standard Module) and if funds are not available for such non-recurrent capital items, then a special contribution must be levied, not have the money obtained by taking it from the administrative account;

• both Motions 5 and 6 are for specific tasks, namely the erection of a timber fence and the surveying of the scheme’s boundaries. The resolution to Motion 6 is merely "Motioned, seconded and passed. Quotations to be sought". Section 103 of the Standard Module provides that, for projects costing over the threshold amount calculated by multiplying the number of lots by $100 ($600 for Stratford Gardens), the committee can only be authorised to undertake a task where the task and the expenditure are certain – the committee cannot be given authority to select the service provider and to determine the amount for itself. Further, this section is subject to section 104 which requires that at least two quotes must be put before a general meeting if the cost of the project exceeds the number of lots times $250 ($1,500 in the case of Stratford Gardens). I do not know the estimated cost of either the fence or the survey, though they are both likely to exceed the $600 committee threshold, and perhaps one or both the "major spending" threshold of $1,500.

In summary, apart from the budget resolutions (for which I do not have information concerning the expenditure items and their correctness or otherwise), there are few resolutions that are not in contravention of the legislation. Those others not dealt with above, namely Motions 7, 8 and 9, are so wanting in information and specificity as to be useless as an authority or a record. Accordingly, I have invalidated this entire meeting save for Motions 1 to 4, being the confirmation of minutes and the budget motions.

I have also set out these motions in some detail, to evidence the great need this body corporate has for professional assistance in its administration.

Fourthy, a problem identified by the adjudicator for Order 510-1999 issued in December 1999, some three years, still remains, as can be seen in my comments above. That adjudicator wrote –

I do wish to make a concluding comment about the management of this Body Corporate. It seems to me that the Body Corporate has experienced difficulty since its Body Corporate Manager ceased providing services some time around April 1998. There is indication that the Body Corporate was unhappy about the Body Corporate Manager being somewhat "distant" and not "hands on". This left the Body Corporate in a situation where people without appropriate knowledge of legislative requirements were managing the Body Corporate. Whilst I am not making any adverse comments about the current Chairperson, I do wish to wish to encourage the Body Corporate to consider engaging a Body Corporate Manager with appropriate knowledge and skills. The minutes of a meeting of the Body Corporate held on 13 September 1999 indicate that a Body Corporate Manager is to be appointed "... if the meetings continue to be "difficult", in terms of arguing amongst members". I note that the Chairperson is being paid $25 per hour for his services. This money could be used to pay a Body Corporate Manager.

Spizick is still engaged by the body corporate as paid chairperson and treasurer at the rate of $25 per hour. I note that he was paid $825 for the financial year 1 March 2001 to 28 February 2002 as "Chairman’s Fees", and an amount of $850 has been budgeted for the current financial year. Spizick is a qualified accountant and the financial statement for the body corporate shows that expertise. At the outset of the teleconference, Spizick stated that after earlier mistakes, he had gained competency in the legislation from reading it, and discussions with solicitors and Body Corporate Managers. However, whatever advice he has given the body corporate in the preparation of the notice of meeting, the motions, and the minutes, is largely incorrect as can be seen from the comments above. This does not detract from his ability in the actual financial recording, or as an accountant in other fields, but professional Body Corporate Managers have the advantage of specialising in body corporate management and therefore are expected to know the legislation and how a body corporate must be administered.

It seems to me that the situation as described by the adjudicator in December 1999, is still the case and, in the interests of all owners, should not continue. The problems evidenced in the three previous applications are relevant to this order to the extent that they are, by reference, included as part of the reasons to this order.

LASTLY, in summary, I have set out an abundance of reasons in support of my decision to appoint an Administrator to the body corporate. The foremost of these is the third reason, namely the continuing failure of the body corporate to administer itself in accordance with the legislation. At page 2 of the adjudicator’s reasons to Order 287-2000 of October 2000, given as part of her reasons for voiding the resolutions purported to have been passed at a general meeting, the adjudicator said –

"In addition, there are many basic discrepancies with the convening and holding of the body corporate meeting held on 22 May 2000. For the following reasons, I have ordered that the resolutions purportedly passed at the meeting were at all times void"

The errors and omissions set out in my third reason above, confirm that the body corporate, even with paid assistance, continues to maladminister itself some two years later, leading again to the voidance of motions at a further meeting. The three owners opposing the application, who comprise the dominant voting faction (in poll voting), say that they wish to exercise their democratic right in continuing with the present manner of administration. The facts are contrary to this opinion, and I confirm my belief given at the teleconference that I believe the appointment of an Administrator is necessary.

APPOINTMENT:

I view the appointment of an Administrator to any body corporate as a measure of last resort, and evidence of that reluctance to impose an Administrator on the body corporate in this case has been shown by adjudicators in the earlier applications, despite adverse findings against the administration of the body corporate.

The implications of sections 223(3)(v), 224 and 248 of the Act are that an Administrator should be appointed where a body corporate (including its committee) is not properly discharging its duties under the Act or its community management statement. This is the situation I have described above.

The appointment is invariably made with the concurrent withdrawal of all powers from the body corporate committee and my order is to that effect.

It is important that the Administrator completes a year’s administration by calling and conducting the annual general meeting, having prepared the budgets, reviewed the insurance, determined appropriate maintenance motions, etc.

I note from the financial accounts relating to the meeting, that the end of the financial year is 28 February in which case an annual general meeting is due to be held between 1 March and 31 May 2003. Accordingly, the appointment will run from the issue of the order until the close of the annual general meeting held between 1 March and 31 May 2004. Unless the nomination procedures have already been commenced, which I doubt, the Administrator may not be able to meet the legislative timing requirements for the impending annual general meeting – the Administrator will need to make reasonable and necessary adjustments, providing they do not detract from the minimum times available to owners to submit nominations and motions, or the notice of meeting.

I have already stated that one of the aims of the teleconference was for owners to put forward the names of two preferred Body Corporate Managers. The applicant and two other owners (Jacksons of Lot 3, and Daly of Lot 5) have jointly submitted Cairns Body Corporate Management Pty Ltd, Cairns as their first preference, and Cairns Strata Management as their second preference. They put the former as their strong preference.

Upon inquiry by this office, Spizick has advised having contacted the remaining three owners (Titternes of Lot 1, Ersfelds of Lot 2, and Mettman of Lot 4), none of who agree to the appointment of an Administrator as such an appointment would take away their democratic rights. He stated that as they do not want an Administrator, they would not be putting forward any names for appointment.

In these circumstances, as Craig Armstrong of Cairns Body Corporate Management Pty Ltd ("CBCM") is a professional Body Corporate Manager of some years experience and neither he nor CBCM is adversely known to me (or this office generally) such as would preclude appointment, I would have appointed him without further inquiry. However, Spizick and owners of the dominant voting faction, have made some adverse comments concerning past involvement with CBCM, which I need to consider to ensure the impartiality of the appointee.

The adverse comments stem from a prior approach by the applicant to CBCM in early 2002, and the subsequent unsuccessful request by a representative of CBCM to the body corporate (Spizick) to view certain body records. Spizick points out that an inspection fee was not offered and the representative (Spencer) was refused access. Spizick also points out that in a letter from the representative to the applicant dated 21 March 2002 (copy included with the application), the representative makes an observation concerning levies without having viewed the records.

I have read the comments of the applicant, the relevant owners in their submissions, and the letter from CBCM dated 21 March 2002 addressed to the applicant (which Spizick’s comments refer to), and it is my view that the contact was very slight and does not affect CBCM’s impartiality. However, in recognition of even that contact, I have chosen as Administrator a person of that company other than the representative who had that prior contact.

The matters of the dividing fence and the dog on Lot 2 should be addressed with the advice of the Administrator.