Capricorn One [2003] QBCCMCmr 392 (19 February 2003)

Last Updated: 7 September 2007

RA MeekREFERENCE: 0602-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9871
Name of Scheme:	Capricorn One
Address of Scheme:	198 Ferny Avenue SURFERS PARADISE QLD 4217

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

Donald Philip Law, the owner of lot 35



RA MeekI hereby order that the application by Donald Philip Law, the owner of lot 35, for orders that -

1.	Declare motion 9 carried at the AGM invalid;
2.	Declare that the levies voted on at AGM include GST; and / or
3.	Declare the meeting invalid,

is dismissed.
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STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0602-2002

"Capricorn One" CTS 9871

The applicant, Donald Philip Law, the owner of lot 35, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1. Declare motion 9 carried at the AGM invalid.

2. Declare that the levies voted on at AGM include GST; and / or

3. Declare the meeting invalid.

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

The applicant’s grounds are relatively brief and provide limited detail regarding the basis of the application. In contrast, his reply to submissions is considerably more detailed. It raises new allegations; for example, paragraph 2(c) regarding Rickard’s conflict of interest, and that the motion was not on the agenda of the committee meeting. This raises a fundamental question for me as the adjudicator. Section 220 of the Act provides that when investigating an application, I must observe natural justice.

In my view, natural justice requires that a person responding to an application, or possibly affected by an order sought, should be afforded the opportunity to respond to all allegations. The applicant’s more detailed response is contained in his reply, and not his original application. However it is only his original application which affected parties have been invited to respond to by way of submission.

In the circumstances, I am not prepared to take account of any new allegations or substantive elaboration by the applicant contained in his reply. In my view, the applicant could have, and should have, prepared his original application in greater detail. For example, "time lines for holding the AGM and notification of motions where not met". Where is the specific detail to explain and substantiate this statement. This is basic information which the applicant should have included as part of his obligation to establish a legitimate basis for his application, or at least the orders which he is seeking.

Section 192 of the Act provides that an application "must state in detail the grounds on which the order is sought". If any applicant fails to provide this basis level of detail or substantiation to their application, I do not consider that it is my role to actively solicit such detail. To do so may in fact contravene my responsibility to observe natural justice between the parties. In support of my view on this aspect, I refer to the decision of Robin QC DCJ in Tully V. The Proprietors "The Nelson" Body Corporate where he stated -

In my opinion, under s.220 and s.221 it is for the adjudicator to determine what ought to be done by way of investigations and there is no error of law by an adjudicator who determines that the evidence available is insufficient to justify a necessary conclusion and does not actively seek further evidence to support the application.

I intend to undertake my investigation of this application on the basis I have outlined.

The applicant’s grounds for the first order sought are –

• Motion 9 was not received by the due date. This raises the questions of what was the due date, and when was the motion received. The body corporate committee has not responded specifically to this point. The committee minutes of 13 April 2002 do state under the heading AGM agenda, "motion submission by T Rickard ... varying the remuneration payable under the current caretaking agreement" as one of the motions intended for inclusion on the agenda of the meeting. This was over 2 months before the AGM, and obviously before the notice was sent out.

• Motion 9 was put forward by the owner of lot 1. The applicant has not explained the significance of this statement, either in his grounds or in his reply. If the applicant is suggesting that the owner of lot 1 was not entitled to propose the motion, then he is incorrect. Motions for inclusion on the agenda of a general meeting can be proposed by both owners, or the committee. In my view, it is within the capacity of the owner of lot 1 to propose the motion.

• "My understanding is that the voting by members present at the committee meeting (April) was one for and one against". The applicant has the onus of establishing the accuracy of his statements. The body corporate submission states that the applicant was not present at the committee meeting and "he can offer no opinion on (the minutes) accuracy or otherwise". The April minutes record that it was resolved that T Rickard be permitted to submit a motion for an increase of $5000 for consideration of all owners at the AGM". There is no submission from any person present at the committee meeting challenging the accuracy of the minutes, and the April minutes were approved at the September meeting. Accordingly, I conclude that the applicant’s allegation in this regard is unsubstantiated.

• "The minutes of the April meeting were not received until early September and I believe they were modified to reflect criticism at the AGM". The body corporate has not explained the delay in circulating the April minutes. Section 37 of the Standard Module requires that copies of all resolutions passed at committee meetings must, in usual circumstances, be given to owners. No time period is specified in which this must occur. Section 37 also provides for the giving of a notice of objection. I note that in the particular scenario, the committee resolved to include a motion on the agenda of the AGM, to be held in June, however minutes of the relevant committee meeting at which the resolution was passed were not provided to owners until "early September" according to the applicant. This is an excessive period of delay on the part of the committee, and renders opposition by owners to the carrying out of motions impossible. I suggest that delay of more than a month in sending minutes to owners is excessive.

• Moreover, a committee is not entitled to carry out a resolution passed until after the "required period" for the giving of a notice of opposition has passed. I recommend that the committee of this body corporate immediately review its policy of distributing committee minutes, and ensure that its future practice accords with both the requirements of, and spirit of, section 37 of the Standard Module. As for the allegation of being "modified" the applicant has not elaborated on this, and I refer to my earlier statements above regarding the minutes having been approved, and no person present at the meeting confirming in a submission the applicant’s allegation. I am not prepared to invalidate motion 9 on this basis.

• "A motion moved and seconded at the AGM that the "motion be not put" was not accepted by the chairman and not recorded in the minutes". There is no ability to move a procedural motion like that contemplated by the applicant at a general meeting. The legislation allows only limited procedural motions (eg. section 57 amendment of motions at general meeting). Otherwise, there is the power of the chairperson to rule a motion out of order (see section 47). The applicant’s proposed motion at the meeting was invalid and of no effect.

For the above reason, I intend to dismiss the applicant’s request for the invalidation of motion 9.

The applicant next states that "the motion re levies did not include any reference to the fact that GST was excluded". The specific relevance of this is not explained, however the applicant seeks a declaration that "the levies voted on at AGM include GST".

The body corporate submits –

Due to an oversight, the wording of the motions to approve the administrative fund and sinking fund levies did not indicate if the amounts included GST or not. In previous years, the wording of those motions clearly indicated that the amounts did not include GST. When this matter was raised by (the applicant) at the meeting, it was made clear to him and all voters present that the amounts did not include GST. ...

The submission then goes on to explain that if it is declared that the amounts did include GST, then a shortfall will be created, and the body corporate will need to call another meeting, and raise a special levy, in order to achieve its current budget position; namely that the levies carried were exclusive of GST.

One wonders what the applicant is hoping to achieve in seeking this order. There is no contravention of a statutory provision in the levies being GST exempt, as they were explained to be to owners present at the meeting. I consider that this order sought should be dismissed, as being without merit.

Finally the applicant seeks that I declare the meeting invalid for the reasons that "time lines for holding the AGM and notification of motions were not met" and that "the auditor report did not include an audited statement of account".

I have already noted the applicant’s failure to properly detail or explain his allegation. The body corporate submission notes that owing to the reasons specified, "it was impossible to hold the meeting prior to 31 May 2002. The meeting was held as soon as practicable after this date with no owner being disadvantaged".

The legislation requires that the AGM of the body corporate be held within three months of its financial year end date. In the case of this body corporate, the financial year end date is 28 February. Consequently, the AGM was required to be held before 31 may 2002. The question is, is this fatal?

Judge Boulton in Wei-Xin Chen V. Body Corporate for Wishart Village stated –

The very detailed provisions of the standard module to which I have referred above make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide.

There is no suggestion here that the actions of the committee were not bona fide. The body corporate submits that no owner was disadvantaged. The applicant has replied that "How does he know?" Submissions were sought from all owners regarding the application, and not one owner has submitted to me that they were disadvantaged. Moreover, no owner has stated in submissions that they were concerned generally with the conduct of the meeting, or the delay in the holding of the meeting. In fact, out of 45 other owners, only one owner is supportive of the application. I conclude that the applicant has not established what he impliedly asserts; that the timing of the meeting was detrimental to owners. Moreover, I am satisfied with the body corporate’s explanation regarding the Audited Statement of Accounts.

I conclude the applicant’s grounds do not warrant the invalidation of the meeting in its entirety. To do so would cause substantial disruption to the operation of this body corporate, and additional cost to owners in convening further meetings (a committee and a general at least) which cannot be justified on the grounds submitted. I intend to dismiss this application in its entirety.





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