Whitsunday Vista Building D [2003] QBCCMCmr 47 (4 August 2003)

Last Updated: 17 May 2005

REFERENCE: 0489-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27174
Name of Scheme:	Whitsunday Vista Building D
Address of Scheme:	1-5 Hermitage Drive ARLIE BEACH QLD 4802

TAKE NOTICE that pursuant to an application made under the abovementioned Act by William Hugh Moore Bell, a committee member

I hereby order that the resolution of the committee of Whitsunday Vista Building D headed "Instruct Lawyers" purportedly carried by the committee of that body corporate outside of a committee meeting on 17 July 2003, is invalid and of no effect.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0489-2003

"Whitsunday Vista Building D" CTS 27174

The applicant, William Hugh Moore Bell, a committee member has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote –

1. That the notice of committee meeting dated 14 July 2003 be declared invalid or ineffective to call the proposed committee meeting on 17 July 2003; and
2. That the body corporate be precluded from lodging an application with the Commissioner for Body Corporate and Community Management seeking orders set out in the notice as these proposed orders have already been the subject of a determination by the commissioner for Body Corporate and Community Management.

The applicant also sought the following interim orders of an adjudicator, quote –

1. That the notice be declared invalid or ineffective for the purposes of calling the proposed committee meeting on 17 July 2003; and / or
2. That the proposed committee meeting on 17 July 2003 be postponed until such time as a valid notice is given to all relevant persons.

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

(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)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

This application is the latest in a growing number of applications before this office involving this scheme. Currently, applications 409-2003 and 480-2003 are with this office for determination. Applications 480-2003 and this application are closely related. In 480-2003, the body corporate is seeking orders which were previously the subject of application 696-2003. Application 696-2003, made by the body corporate, was dismissed on 4 December 2002 for the reason that the Commissioner determined that the application should be dealt with in a court of competent jurisdiction.

The body corporate (in application 480-2003) is now seeking the same orders it sought in 696-2003, the difference being that in 480-2003, it now seeks specialist adjudication of the dispute, based on the amendments to the Act which came into effect on 4 March 2003. Section 265 provides –

265 Specialist adjudication of particular disputes
(1) The adjudication of a dispute must be specialist adjudication if--
(a) the dispute is about a claimed or anticipated contractual matter about--
(i) the engagement of a person as a body corporate manager or caretaking service contractor for a community titles scheme; or
(ii) the authorisation of a person as a letting agent for a community titles scheme; or
(b) the dispute is about the transfer, under chapter 3, part 2, division 8, of a letting agent’s management rights; or
(c) another provision of this Act requires the adjudication to be specialist adjudication.43
(2) The specialist adjudicator must be the person chosen by the commissioner, and need not be a person nominated by a party to the application.

In this application, the applicant is seeking the invalidation of a notice of committee meeting which was held by way of flying minute on 17 July 2003. The application further seeks that the body corporate be precluded from lodging an application with this office regarding the matter the subject of the disputed committee meeting. This application has already been made by the body corporate (480-2003).

The applicant also sought two interim orders. However, the interim orders related to a committee meeting held on 17 July 2003, and given that the application was not received by this office until 21 July 2003, and moreover, given that the body corporate have already implemented the resolution the subject of the committee meeting (by lodging application 480-2003), there is no point in my considering the requested interim orders. I therefore intend to consider the final orders sought. In this regard, I have the benefit of a submission from the body corporate in response to the application.

Before proceeding, I consider it relevant to quote the terms of the resolution purportedly passed by the body corporate committee by flying minute on 17 July 2003, quote –

That the committee of the body corporate ... hereby resolves –
To instruct its lawyers to lodge an application with the Commissioner for Body Corporate and Community Management seeking the following orders:

1. A declaration that the body corporate is entitled to terminate the caretaking agreement dated 22 November 1999 pursuant to clause 9;
2. A declaration that the letting agreement dated 22 November 1999 is intended to have the same meaning and effect as the caretaking agreement dated 22 November 1999 (the "implied provisions");
3. A declaration that the body corporate is entitled to terminate the letting agreement dated 22 November 1999 pursuant to the implied provisions;
4. All necessary orders and directions to give effect to the above declarations;
5. The respondent to pay the applicant’s costs of and incidental to the application;
6. Other orders as the commissioner or adjudicator thinks fit.

That, if the body corporate’s application is referred to specialist adjudication pursuant to s265 BCCM Act, that Mr James Bell QC be appointed specialist adjudicator.

It is on the basis of this committee resolution that the body corporate has made application 480-2003 (per body corporate submission to this application).

The applicant has sought to invalidate the notice of committee meeting dated 14 July 2003. After providing certain "background" which I conclude has no specific relevance to the application, the applicant states the following grounds –

1. An identical application was lodged on 13 November 2003 and (this office) provided a certificate of dismissal in respect of that application.
2. A motion to commence legal proceedings in a court of competent jurisdiction was defeated at an EGM of the body corporate.
3. The body corporate has not authorised expenditure in respect of the cost of the application for dispute resolution proposed to be voted on by the committee in accordance with section 101 of the Accommodation Module.

The applicant has not referred to any specific basis for invalidation of the notice. This is relevant since the applicant has requested an order that the notice "be declared invalid or ineffective to call the proposed committee meeting on 17 July 2003". Obviously, the making of such an order requires some basis. It is clear from the submission of the body corporate that the motion was proposed for voting outside of a committee meeting. Section 33 of the Accommodation Module provides that –

33 Voting outside committee meetings [SM, s 35]
(1) A resolution on a motion before the committee is a valid resolution of the committee, even though the motion is not passed at a meeting of the committee called and conducted under division 7, if--
(a) notice of the motion is given to all committee members or, in an emergency, as many members as it is practicable to contact; and
(b) a majority of all voting members of the committee agrees to the motion.
(2) The notice must be given in writing, and the members’ agreement to the motion must be given in writing but, in an emergency, the notice may be given, and the member’s agreement expressed, orally or by another appropriate form of communication.
(3) For the operation of section 32(1) and (2), the committee, in dealing with a resolution under this section, is taken to deal with the resolution at a meeting of the committee.

It is clear that the use of the procedure outlined in section 33 is not restricted to circumstances of emergency. From the resolution passed, it is clear that the notice was given to at least 6 committee members, including the applicant, all of whom were able to respond to the notice and cast a vote. The motion was resolved carried by the committee by 5 votes to 1 on 17 July 2003. Given the applicant’s lack of any basis for invalidation of the notice, and its prima facie compliance with the requirements of section 33, I do not intend to investigate this aspect further.

I have noted the applicant’s more general grounds for invalidation of the resolution. The first I consider is a matter for the Commissioner to consider in the context of application 480 of 2003. I note that a motion considered by the body corporate in general meeting to commence legal proceedings in a court of competent jurisdiction "was defeated at an EGM of the body corporate". Consequently, I presume that the body corporate committee was unable to proceeding further other than by way of a second application to this office, this time requesting specialist adjudicator on the basis of the amended section 265 of the Act. The applicant has stated –

The body corporate has not authorised expenditure in respect of the cost of the application for dispute resolution proposed to be voted on by the committee in accordance with section 101 of the Accommodation Module.

That section provides -

101 Spending by committee [SM, s 103]
(1) The committee may only carry out a proposal involving spending above the relevant limit for committee spending for the scheme if--
(a) the spending is specifically authorised by ordinary resolution of the body corporate; or
(b) the owners of all lots included in the scheme have given written consent; or
(c) an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions; or
(d) the spending is necessary to comply with--
(i) a statutory order or notice given to the body corporate; or
(ii) the order of an adjudicator; or
(iii) the judgment or order of a court.
(2) For this section, if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for committee spending if the cost of the project, as a whole, is more than the relevant limit.
(3) This section has effect subject to the requirements under this division for spending that is above the relevant limit for major spending.

In response, the body corporate has stated –

The matters voted on by the committee outside the committee meeting are matters within the power of the committee. The motion is not a restricted issue pursuant to section 24 of the Accommodation Module. ...

Section 312 BCCM Act does not contemplate that an application of the type voted on by the resolution outside the committee meeting is a proceeding which requires a resolution of any type by a body corporate. The body corporate submits that s.312(2)(d) contemplates a body corporate would only need to pass an ordinary resolution to commence a proceeding for an enforcement of an adjudicator’s order. ...

The body corporate submits that the business of the resolution passed outside the committee meeting on 17 July 2003, was valid to the extent that it authorised application 480/2003. ...

It is not my intention in this order to determine whether it is within the jurisdiction of this office for the body corporate to bring the application which it has in 480-2003. Rather, I am concerned with the validity per se of the committee resolution carried at the "meeting" held on 17 July 2003. In this regard, I consider that the body corporate submission does not address the point raised by the applicant; the reference to section 101 of the accommodation module.

On the basis of that section, the committee can only carry out a proposal involving spending above the relevant limit for committee spending if -
(a) the spending is specifically authorised by ordinary resolution of the body corporate; or
(b) the owners of all lots included in the scheme have given written consent; or
(c) an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions; or
(d) the spending is necessary to comply with--
(i) a statutory order or notice given to the body corporate; or
(ii) the order of an adjudicator; or
(iii) the judgment or order of a court.

The relevant limit for committee spending for a scheme is usually $100, and it has not been indicated to me that it is any higher for this scheme. In any event, it cannot be higher than $400 per lot. There are 18 lots in the scheme. The means that this committee cannot carry out a proposal involving spending of more than $1800 (in the usual case), unless "the spending is specifically authorised by ordinary resolution of the body corporate". There is no evidence of such a resolution having been carried, and indeed the body corporate are relying on the committee resolution in question for the making of application 480-2003. I conclude that the resolution in question is beyond the power of the committee for the reason that it will commit the body corporate to expenditure beyond the limit which the committee is authorised to propose and / or carry out.

The specialist adjudication is proposed to be undertaken by Mr James Bell QC. The default position for the costs of specialist adjudication is that "unless the adjudicator otherwise orders, the applicant is responsible for the costs of the adjudication" – (see section 280 of Act – Costs of specialist adjudication). In application 480-2003, the applicant is the body corporate. Even with virtually no information on the likely cost of the proposed specialist adjudication, I have no hesitation in stating that I believe that the cost of the specialist adjudication alone will exceed the relevant limit for committee spending, even if this body corporate has by special resolution increased this limit to the maximum of $400 per lot. Given that the going rate for a Queen’s Counsel is in the range of thousand of dollars per day, I consider that the maximum limit of $7200 would be exceeded by implementation of the committee’s proposal. Moreover, the lower possible limit of $1800 would probably be exceeded before the hearing of the matter, simply by the cost of the specialist adjudicator reviewing the material.

Moreover, these costs are only the costs of the specialist adjudicator. They do not include the body corporate’s own legal costs of being legally represented at the specialist adjudication. Clearly, the body corporate has lawyers acting for it in this dispute.

In the circumstances, I intend to invalidate the resolution of the committee purportedly carried by it outside of a committee meeting on 17 July 2003. I conclude that an ordinary resolution of the body corporate in general meeting is required for such a proposal to be valid, or alternatively, for one of the other provisions in section 101(1)(b)(c) or (d) to apply.

I am aware that this order has significant implications for application 480 of 2003.