Imperial Surf [2003] QBCCMCmr 46 (4 August 2003)

Last Updated: 17 May 2005

REFERENCE: 0254-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9742
Name of Scheme:	Imperial Surf
Address of Scheme:	72 - 80 Esplanade SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Duncan A LEE as nominee for Beachbourne Pty Ltd, the owner of Lots 1 and 3,

I hereby order that the application for the following order – That motion 16 passed at the Annual General Meeting held on 8th April 2003 be declared void, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0254-2003

"Imperial Surf" CTS 9742

This is the final order to an application by the applicant, Duncan Lee for Beachbourne Pty Ltd of Lots 1 and 3, which has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") -

"That motion 16 passed at the Annual General Meeting held on 8^th April 2003 be declared void."

The applicant also made application for an interim order and on 24 April 2003 I made the following Order 254-2003 –

C G YOUNGI hereby order that the body corporate must not implement or otherwise act upon the resolution passed in respect of Motion 16 at the annual general meeting held on 8 April 2003 for the installation of a PABX telephone system, pending determination of the final order to this application.

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

JURISDICTION:
This is a dispute between an owner (the applicant Beachbourne Pty Ltd), and the body corporate (the respondent), concerning the validity of a resolution for the purchase and installation of a PABX telephone system to service lots in the scheme. This is a matter that falls within the dispute resolution provisions of the legislation (see sections 227, 228 and 276 of the Act).

General powers of an Adjudicator in making an order:

Section 276(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 contractual matter 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) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1) of the Act).


APPLICATION:
In accordance with section 243 of the Act, a copy of the application was provided to the respondent body corporate (committee), with an invitation to respond to the matter of dispute raised in the application. The respondent lodged a written submission. The applicant did not exercise its right to view and reply to the submissions, as invited in the office letter of 1 May 2003 (see sections 244 and 246 of the Act).

The applicant states that the resolution is inconsistent with the legislation in a number of instances. Firstly, that individual handsets are part of the PABX purchase package, and as these are destined to be items of "utility infrastructure" within lots, they are the individual responsibility of owners to purchase and install (and maintain). Secondly, the resolution is misleading as to the total cost of the PABX system in that it does not include any costing for the following: the installation of the system; the complementary "computer and call" software; and the wages of personnel to operate the system.


DETERMINATION:
The applicant has raised two grounds in support of its application to invalidate the resolution passed in respect of Motion 16 at the annual general meeting held on 8 April 2003. I shall deal with each of the grounds in turn.

1. Inconsistency with legislation:
I have already précised above the argument of the applicant concerning the handsets. The respondent body corporate is correct in its submission that the purchase of the PABX equipment (including the handsets) proposed in the relevant motion, is a purchase of personal property for which authorisation under section 116(4)(b) of the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module") requires a special resolution as the cost exceeds the $33,000 threshold for the scheme (165 lots times $200).

Although the error has not been put in issue by the applicant, I note that the motion was put as requiring only an ordinary resolution. It would appear that the body corporate took pains to meet the additional obligations of section 104 of the Standard Module concerning major spending, including a reference to past adjudicated decisions where separate motions for two or more tenders is required, but overlooked the requirements of section 116(4)(b).

The respondent has pointed out, however, that the voting on the motion did meet the criteria for a special resolution, namely that: 45 votes were cast were in favour of the motion and 8 votes against, thereby meeting the first of the requirements for a special resolution to pass; the positive votes were at least two-thirds of the votes cast (45 out of 53 cast being 84%); the negative votes are not more than 25% of the number of lots (8 out of 165 is 5%) and do not represent in contribution lot entitlements more than 25% of total such entitlements (see section 106 of the Act).

In the circumstances that the matter was not in issue and the requirements of a special resolution were in any case met, I am making no order to invalidate the resolution on this ground.

Returning to the PABX purchase, it is common ground between the parties that a handset set installed in a lot is not common property utility infrastructure (see section 20(1)(a) and (b) of the Act). However, I do not accept an alternative argument put by the respondent that the handsets would, if never installed, merely remain a permissible common property asset, or if installed, would remain an asset of the body corporate but located in lots. The legislation sets out those matters that a body corporate may expend moneys on, and it does not include personal property for owners which would undoubtedly be the nature of the handsets.

However, a body corporate is able to purchase such items if they are purchased for the purpose, and that purpose is put into effect within a reasonable period, of reimbursement of the cost under a section 119 arrangement with owners. The respondent has put that argument and in the absence of any evidence to the contrary, and here I note that the applicant did not inspect the respondent’s submission in order to rebut such a claim, I accept that the purchase will result in the PABX becoming part of the common property utility infrastructure upon installation, followed by reimbursement of the relevant costs by participating owners.


2. Motion does not include the costing for installation, computer software and operation.
The applicant contends that the motion was misleading in that it did not inform owners of three additional costs associated with the installation of the PABX system as an operating telecommunications facility, namely installation, computer and call accounting software, and operation costs. I shall deal with these separately.

Installation: The total grounds of the applicant comprise the following single sentence, There is no allowance for the installation of the system which would reportedly cost thousands of dollars. There is no information as to whether the applicant is referring to the installation of the core PABX equipment (eg power source, connection to the building MDF etc) or the installation of the handsets, or both.

If the applicant is concerned that owners have been misled in being unaware that some installation is necessary for the system to function, then all owners had available to them copies of both tenders which both make reference to "installation". In any case, I would imagine that few owners, if any, would not expect the core equipment and handsets required some installation. I would expect that handset installation costs would be reimbursed by participating owners.

If, and this is only speculation in the absence of any grounds, the applicant believes that a higher form of resolution was necessary with the additional cost, then section 116(4)(b) of the Standard Module only requires a special resolution (see my earlier comments) however high the cost is.

In view of the lack of information submitted by the applicant, I do not propose to deal further with this issue.

Computer and Call Accounting Software: The information provided by the applicant in support of this ground is little better than that provided above for "Installation", comprising as it does three lines. The respondent has submitted that the PABX is supplied with the relevant CPU and software to operate the system. Had the applicant inspected and responded to the respondent’s assertion, then I would be in a position to better determine this ground. I do not propose to deal further with this issue.

Operation Costs: Again, the applicant’s grounds comprise a brief, general statement that, from the subsequent comments of the respondent, appears to be more a stab in the dark than an argument based on knowledge or a reading of the tender documents. The respondent has submitted that, the system does not require personnel for its operation... (it) enables direct dial to individual lots and includes an automated attendant that enables calls to be directed to voicemail. Further, the body corporate has an employee on-site manager who can attend to whatever maintenance or other issues that arise as part of his normal management duties.

In summary, for the foregoing reasons given in respect of both major grounds raised by the applicant, I have dismissed the application.