Central Plaza Terraces [2003] QBCCMCmr 44 (4 August 2003)

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

I hereby order that within seven (7) days of the date of this order, the body corporate shall forward a copy of this order, and accompanying statement of reasons to each owner of a lot, at their address specified on the roll.

I further order that following receipt of the order, an owner who requests the secretary to submit a new ballot or voting paper for the AGM to be held on 27 August 2003, shall be entitled to do so, and the secretary shall immediately cause a new ballot and / or voting paper for the AGM to be provided to that owner for completion.

I further order that the body corporate of Central Plaza Terraces shall immediately cause the body corporate’s statements of accounts for the financial year 01 June 2002 to 31 May 2003 to be audited by Lawrence & Reed, at the expense of the body corporate, and following receipt of the auditor’s report, shall immediately provide a copy to all owners.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0031-2003

"Central Plaza Terraces" CTS 27003

The applicant, John Stewart Cobb, the owner of lot 21, has sought several orders of an Adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote –

For the election of Jeanine Cooke to the position of chairperson of the body corporate committee to be declared void.

Action to be taken pursuant to section 74 of the Body Corporate and Community Management (Accommodation Module) Regulaton 1997.

I am seeking that the resolutions at the AGM that are affected by the use of the proxies be invalidated. I fact I would like to see the whole AGM declared invalid because of the proxy issue and because Ms Cooke chaired the meeting.

Ms Cooke and anyone else associated with the Hedley Group that do not own a unit at Central Plaza Terraces, not be allowed to exercise proxies in the future. ...

That no employee of the Hedley Group be allowed onto the body corporate committee.

That disciplinary action is taken against Body Corporate Services for misleading the body corporate about Ms Cooke being a unit owner.

That disciplinary action is taken against Body Corporate Services for allowing an employee of Hedley to become a committee member.

The Department of Natural Resources and Mines to instruct the body corporate to put the matter of the "proxy" offence under section 74 of the accommodation module in the hands of a lawyer with the view to prosecuting Ms Cooke.

For Body Corporate Services to explain why Ms Cooke was allowed to exercise proxies.

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

(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 applicant has failed to comply with the time limitations contained in section 242 of the Act in making his application. Section 242(1) provides that an application of the type made must be made within three months of the date of the meeting in question. The meeting was 24 June 2002, and the application was received on 14 January 2003, some 3 and a half months outside the time period required under section 242. The section provides that an adjudicator can, for good reason, waive the non-compliance.

In determining whether to waive the non-compliance, one of the most significant factors is the relative merits of the application, and the likelihood of the applicant succeeding in their claim. Given that I am satisfied that the applicant is entitled to succeed in part of his application, the reasons for which I will outline shortly, then in the circumstances, I intend to waive the non-compliance and proceed with a consideration of the application.

Before proceeding, I wish to record that submissions regarding the application were sought from all other owners and the body corporate committee. In response, submissions were received from one other owner, and the committee. Both submission oppose the application. I consider it relevant to note the lack of response or apparent concern by owners at the allegations raised by the applicant. The one owner who did respond noted that –

I further note that the 2003 AGM of the body corporate is to be held on 27 August, 2003.

The orders sought by the applicant are in several categories. I have re-ordered the orders sought into categories and will deal with these in turn. The categories are -

The position of chairperson -

For the election of Jeanine Cooke to the position of chairperson of the body corporate committee to be declared void.

That no employee of the Hedley Group be allowed onto the body corporate committee.

I am seeking that the resolutions at the AGM that are affected by the use of the proxies be invalidated. In fact I would like to see the whole AGM declared invalid because of the proxy issue and because Ms Cooke chaired the meeting.

Ms Cooke and anyone else associated with the Hedley Group that do not own a unit at Central Plaza Terraces, not be allowed to exercise proxies in the future. ...

Action to be taken pursuant to section 74 of the Body Corporate and Community Management (Accommodation Module) Regulaton 1997.

That disciplinary action is taken against Body Corporate Services for misleading the body corporate about Ms Cooke being a unit owner.

That disciplinary action is taken against Body Corporate Services for allowing an employee of Hedley to become a committee member.

For Body Corporate Services to explain why Ms Cooke was allowed to exercise proxies.

The position of chairperson

The applicant alleges that he "only recently discovered that the Jeanine Cooke who was elected to the chairperson position on the committee was an employee of the Hedley Group". The applicant then explains that he initially nominated for the chairperson’s position, but withdrew when he saw that another owner had already nominated for the position. This was Jeanine Cooke who is not an owner, but who was listed on the ballot paper as an owner.

The applicant seeks that the election of Jeanine Cooke to the position of chairperson of the body corporate committee to be declared void, and further that no employee of the Hedley Group be allowed onto the body corporate committee. In addition to the incorrect description of Cooke as an owner, the applicant alleges a "potential conflict of interest her election to the position of chairperson may pose".

The committee submission acknowledges that the ballot paper was incorrect in describing Cooke as an owner, but states it was meant to specify "owner’s nominee".

There is no basis in the eligibility requirements for committee membership in section 11 of the Accommodation Module preventing Cooke from being nominated for membership of the committee. I am satisfied that at the 2002 AGM, Cooke was so nominated. Moreover, the conflict of interest provisions in section 32 do not prevent Cooke being appointed to the committee, although those provisions may affect her involvement in the committee. As well, for practical reasons, including the delay of the applicant in making the application, the year of Cooke’s chairmanship under review is all but concluded. The AGM for this year is to be held on 27 August 2003. There would be no point in terminating Cooke’s chairmanship now. At the AGM, owners will have the opportunity to consider this issue. I am not prepared to invalidate the election of Cooke for the above reasons.

As I stated, the conflict of interest provisions in section 32 do not prevent Cooke being appointed to the committee, but may affect her involvement in the committee from time to time. In particular, section 32(1) provides that a member of the committee must disclose the member’s direct or indirect interest in any issue being considered, or about to be considered, and to thereafter not vote on the issue, if the interest could conflict with the appropriate performance of the member’s duties about the consideration of the issue.

Cooke may from time to time have a conflict of interest on an issue which precludes her from voting. In particular, her association with TW Hedley (Investments) Pty Ltd, the original owner (see later discussion), and the fact that TW Hedley (Investments) Pty Ltd holds both the building management contract and the letting agents’ contract, would mean that Cooke is precluded from voting in committee meetings on any aspect of the body corporate’s contractual relationship with TW Hedley (Investments) Pty Ltd. For example, if an issue regarding performance of the manager arose, Cooke would be precluded from voting. A less direct conflict would also arise in my view in that Cooke would have a conflict in whether or not to report matters discussed by the committee regarding TW Hedley (Investments) Pty Ltd, back to TW Hedley (Investments) Pty Ltd. This potential conflict might also be adverse to the interests of the body corporate.

Cooke, in her response to the application, has stated –

I consider that owners should consider the above observations when determining how to vote for the position of chairperson at the 2003 AGM, although given that Cooke is the only person nominated, then presumably she will be declared elected as chairperson.

The use of proxies

Cooke was the appointed proxy of 8 of the 22 lot owners. The applicant refers to section 73(2) of the Accommodation Module which states –

(2) Except for a proxy exercised by the original owner under subsection (3), a proxy cannot be exercised for someone else by--
(a) the original owner or a body corporate manager; or
(b) an associate of the original owner or a body corporate manager.

The applicant refers to Cooke being appointed the nominee of TW Hedley (Investments) Pty Ltd, which was the original owner of the scheme.

When this matter was referred to the body corporate and to Cooke, the body corporate responded –

Clearly, on the basis of section 73(2), Cooke is not permitted to act as proxy for any owner. The applicant is seeking that the resolutions at the AGM that are affected by the use of the proxies be invalidated and in fact, that the AGM be declared invalid because of the proxy issue. I have been provided with a copy of the voting register tally sheet for the 2002 AGM showing how Cooke exercised her proxy on behalf of 8 owners. She voted yes to motions 1 to 3 and 5 to 11, and no to motions 4 and 12 to 19. It should be noted that there were also 7 voting papers and one owner persent in person so for each motion, there was a total of 16 possible votes. On the basis of the other votes present, I am satisfied that motions 1, 2, 5, 6, 7, 8, 9, 10 and 11 would still have been carried. As well, motions 12, 13, 14, 15, 16, 17, 18 and 19 would still have been defeated. I therefore refuse to invalidate these resolutions.

In respect of motions 3 and 4 (the audit motions) the results were as follows –

3. That the body corporate’s statement of accounts not be audited (yes, 11, no 3, and abstain 2)

If the 8 yes votes of Cooke are subtracted, the motion would have not been carried because of tied vote.

4. That the body corporate’s statements of accounts for the financial year 01 June 2002 to 31 May 2003 be audited etc. (yes, 5, no, 9, abstain, 2)

If the 8 no votes of Cooke are subtracted, the motion would have been carried, and would have required that the body corporate’s statements of accounts for the preceeding year should have been audited. In the circumstances, whilst I refuse to invalidate the AGM as previously stated, I do intend to order that the body corporate immediately cause the body corporate’s statements of accounts for the financial year 01 June 2002 to 31 May 2003 to be audited by Lawrence & Reed, at the expense of the body corporate. I consider this is in according with how the body corporate voted at the 2002 AGM when the invalid proxy votes are excluded.

The applicant has further sought that Ms Cooke and anyone else associated with the Hedley Group who do not own a unit at Central Plaza Terraces, not be allowed to exercise proxies in the future. I do not intend to make an order to this effect. This is the clear effect of section 73(2) and consequently there is no need to enshrine the terms of the legislation in an order. The legislation applies at all times, and will preclude Cooke or any other person associated with Hedley from holding proxies.

The imposition of penalties for an alleged offence

The applicant has should that the former department instruct the body corporate to put the matter of the "proxy" offence under section 74 of the accommodation module in the hands of a lawyer with the view to prosecuting Ms Cooke, and further, take action pursuant to section 74 of the Body Corporate and Community Management (Accommodation Module) Regulaton 1997.

Section 74 of the Accommodation Module provides -

74 Offence [SM, s 76]
A person must not exercise a proxy, or otherwise purport to vote on behalf of another person, at a general meeting knowing that the person does not have the right to exercise the proxy or otherwise vote on behalf of the other person.
Maximum penalty--100 penalty units.

This office, nor this department (now Tourism, Racing & Fair Trading) does not have a role in enforcement of penalty provisions under the legislation. Rather, it is for individuals who consider that an offence has been committed, to commence proceedings by way of complaint under the Justices Act.

Action against Body Corporate Services

The appliant seeks that disciplinary action is taken against Body Corporate Services -

As I have noted in several other orders, the services provided by body corporate managers in this State are currently not regulated by legislation in any way, although such regulation is proposed. Consequently, there is no basis for "disciplinary action" being taken against a body corporate manager. The only sanction which can be imposed on a manager is either via an order directing a manager to correct some procedural irregularity, or alternatively, by owners, in determining whether to continue a manager’s appointment. In the circumstances, I consider that no sanction by way of order is warranted, and I therefore decline to do so.

Number of Scheme:	27003
Name of Scheme:	Central Plaza Terraces
Address of Scheme:	10 - 16 Digger Street CAIRNS NORTH QLD 4870

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Central Plaza Terraces [2003] QBCCMCmr 44 (4 August 2003)