South Pacific Plaza [2003] QBCCMCmr 375 (11 February 2003)

Last Updated: 7 September 2007

DJ ReardonREFERENCE: 0053-2003

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10922
Name of Scheme:	South Pacific Plaza
Address of Scheme:	157 Old Burleigh Road BROADBEACH QLD 4218

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

Vincent Murphy, the Co-owner of Lot 56


I hereby order that the Body Corporate shall not carry out motion 11, as considered and carried at an annual general meeting of the Body Corporate held on 22 November 2002.

DJ ReardonI hereby declare that the resolution of the Body Corporate regarding motion 11 as considered and carried at an annual general meeting of the Body Corporate held on 22 November 2002, is void.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0053-2003

"South Pacific Plaza" CTS 10922

1.	Orders sought

The Applicant, a Co-owner of Lot 56, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act"), quote-

"(1) The Commissioner rule that Motion 11 passed at the Annual General Meeting of the body corporate held on 22-11-02 is invalid because it did not comply with the provisions of Section 104(1)(b), 2 and 3 of the Body Corporate and Community Management (Standard Module) Regulations 1997.

(2) That motion 11 is also invalid because the body corporate has not been authorised by a resolution without dissent to sell or otherwise dispose of part of the common property as required under Section 111(2) of the Standard Module.

(3) That the motion resolved unanimously at the body corporate committee meeting held on 11-10-02 regarding the master plan, which included the expenditure of up to $20 000 was invalid because it was in breach of Section 34(2) of the Body Corporate and Community Management (Standard Module) Regulations 1997."

The Applicant has also sought the following interim order of an adjudicator, quote-

"The interim order I am seeking is for the committee of South Pacific Plaza Body Corporate to take no further action with regard to Motion 11, pending a final decision of the Adjudicator."

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 "South Pacific Plaza" community titles scheme consists of 84 lots and common property. The community management statement for "South Pacific Plaza" indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module") applies to the scheme.

2.	Application and submissions

This dispute resolution application was made on 21 January 2003. Also on 21 January 2003, a staff member of this Office contacted the Applicant on behalf of the Commissioner for Body Corporate and Community Management ("the Commissioner") seeking further information regarding the application, including clarification of the interim order being sought in the application. The Applicant provided the further information requested by the Commissioner in facsimiles dated 21 January 2003.
On 28 January 2003, the Commissioner sent a copy of the application to the Secretary for the Body Corporate, and invited the Committee to make a written submission about the application. The Body Corporate Manager has made a written submission about the application on behalf of the Committee.

In accordance with section 197(1) of the Act, the Commissioner has referred the application to me to consider whether an interim order is warranted due to the nature or urgency of the circumstances to which the application relates.

3.	Matters in dispute

This application concerns motion 11, as considered and carried by the "South Pacific Plaza" Body Corporate at an annual general meeting held on 22 November 2002. In general terms, motion 11 sought the Body Corporate’s approval for the expenditure of up to $20,000 on investigation of a potential re-development of particular areas of the scheme land. I understand that the proposed investigation would include obtaining professional advice on the proposals for re-development.

The minutes of the annual general meeting held on 22 November 2002 record motion 11 in the following terms:

"MOTION 11 PROPOSED RE-DEVELOPMENT

ORDINARY RESOLUTION

Prior to the voting on motion 11, the Chairman provided the opportunity for owners present to seek further information and clarification of the proposed from Mr Ron Burgess. Mr Burgess fielded several questions from owners prior to the voting being declared.

RESOLVED that the owners South Pacific Plaza CTS 10922 acknowledges the report from Ron Burgess, a member of Peddle Thorp and a member of the Body Corporate Committee, dated June 2002 entitled, "Report on Ground Floor Master Plan".

The Body Corporate resolves by ordinary resolution to spend up to $20,000 (approximately $250 per unit) to carry out further investigations and enquires by the Committee on the options outlined in the attached report including and without limitation engagement of Peddle Thorp to carry out preliminary design work and the engagement of solicitors on behalf of the Body Corporate to report on the legalities of the options contained in the report."

The minutes record that motion 11 was carried with 28 votes in favour of the motion, 15 votes against the motion, and 2 voters abstaining from voting on the motion.

In the application, the Applicant expresses a view that the decision of the Body Corporate made in relation to motion 11 is defective, and should not be carried out. The Applicant raises a number of grounds for this view, which I will consider below.

4.	Interim Orders

At this time, I am 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.

In this case, the applicant has raised concerns regarding the validity of a decision of the Body Corporate to expend a significant amount of money, some $20,000, on investigation and professional services. Once the Body Corporate has engaged service providers to carry out work for the Body Corporate, it may be both difficult and unfair for the Body Corporate to recover monies paid to the service providers, or avoid paying the service providers, if it is ultimately found that the resolution of the Body Corporate to engage the service providers was defective. It seems to me in these circumstances the matter raised by the Applicant is one is suitable for consideration for an interim order.

5.	Determination

I will now turn to the Applicant’s grounds for arguing that the Body Corporate’s decision regarding motion 11 is invalid, and should not be carried out.


5.1 Quotes for major spending

In the supporting grounds to the application, the Applicant states that the Body Corporate’s decision regarding motion 11 is invalid, because the members of the Body Corporate were not provided with at least two quotations for the work, as required by section 104 of the Standard Module.

In general terms, section 104 of the Standard Module requires that owners be presented with at least 2 quotations for carrying out work or obtaining personal property or services, if the cost of carrying out the work or acquiring the property or services is above the "relevant limit for major spending" for the Body Corporate. The Schedule of the Standard Module provides that the "relevant limit for major spending" for a body corporate is an amount worked out by multiplying the number of lots included in the scheme by $200.

As stated previously, there are 84 lots included in the "South Pacific Plaza" community titles scheme. As a result, the relevant limit for major spending for the Body Corporate is $16,800.

Motion 11 clearly contemplates expenditure above this limit, however, owners were not provided with at least 2 quotations for the work. While I accept that the proposed expenditure of $20,000 is for a number of different items, potentially all individually under the relevant limit for major spending, it seems to me that they are all part of a single project to investigate options for, and implications of, the potential re-development of part of the scheme land. As the total proposed expenditure for investigation is above $16,800, in my view, section 104 requires that owners be provided with at least 2 quotations for the various services the Body Corporate proposes to acquire in this investigation process. As the Committee proposed motion 11, it is also my view that section 104(3) of the Standard Module imposes an obligation on the Committee to obtain the quotations for presentation to the Body Corporate.

I note the Committee’s submission that it was intended that any expenditure of the $20,000 would be subject to further Body Corporate approval, however, if this is the case, I am uncertain as to what the purpose of motion 11 actually was. It seems to me that a plain reading of motion 11 is that it purports to authorise the expenditure of $20,000 without further reference to the Body Corporate.

For the reasons outlined above, I agree with the Applicant’s position that the Body Corporate’s decision regarding motion 11 is invalid on the basis that section 104 of the Standard Module has not been complied with. I intend to order accordingly.

While it is not strictly necessary for me to examine the Applicant’s other grounds in support of the application, I intend to make some brief comments below.

5.2	Disposal of common property

The Applicant also states that motion 11 is invalid because the Body Corporate has not resolved by resolution without dissent, to sell or otherwise dispose of, part of the common property as required by section 111(2) of the Standard Module.

Section 111 of the Standard Module makes provision for the way in which, and the extent to which, bodies corporate are authorised to sell or otherwise dispose of common property, and to grant or amend leases over common property. I agree with the Applicant that section 111(2) provides that bodies corporate may sell or otherwise dispose of common property if authorised by resolution without dissent.

However, I do not agree that section 111 of the Standard Module is applicable to this application at this time. My reading of motion 11 is that it seeks Body Corporate authority to expend money on the investigation of options regarding re-development. While potential redevelopment options may include the disposal of parts of the common property, motion 11 itself does not purport to authorise any disposal or sale of common property. Therefore, I do not consider that section 111 is applicable to motion 11. However, this section will apply to any future motions specifically proposing the sale or disposal of areas of common property.

5.3	Committee resolution

The third main ground presented by the Applicant in support of this application concerns the Committee’s decision to submit what became motion 11 for consideration by the Body Corporate at the annual general meeting.

The minutes of a committee meeting held on 11 October 2002 indicate that the members present at the meeting unanimously resolved to submit a motion proposing investigation of potential re-development. The Applicant expresses concern that one of the committee members is also a member of a firm likely to be engaged by the Body Corporate to carry out work in relation to the investigation of the proposed re-development. The Applicant considers that on the basis of section 34(2) of the Standard Module, this member should have abstained from voting on this matter.

Section 34(1) of the Standard Module requires members of committees to disclose any direct or indirect interest the person has in a matter being considered by the committee, if the interest could conflict with the appropriate performance of the member’s duties. Section 34(2) goes on to state that a member in this position must refrain from voting on the issue.

In this instance, there is no question that the member of the committee has fully disclosed to the committee his interest in the firm potentially to be engaged by the body corporate. In addition, it is clear that this interest has been fully and properly disclosed to the members of the Body Corporate.

While I certainly do not consider that the relevant member of the Body Corporate has deliberately acted inappropriately, to be prudent and to ensure compliance with section 34(2), I do consider that he should not have voted on the issue at the committee meeting, and the minutes should have been noted accordingly.

6.	Conclusion

As stated above, I consider that the decision of the Body Corporate regarding motion 11 is invalid. While this order and statement of reasons considers the Applicant’s request for interim relief, it also finally determines the issues raised in the application. As a result, it is not intended to seek further submissions regarding the application, or to make any further orders.