Jadon Place [2003] QBCCMCmr 477 (24 April 2003)

Last Updated: 10 September 2007

DJ ReardonREFERENCE: 0037-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11184
Name of Scheme:	Jadon Place
Address of Scheme:	31 Hooker Boulevard BROADBEACH QLD 4218

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

Darren Schmidt, a Co-owner of Lot 12:

I herby order that pending the election of committee members at the next annual general meeting of the Body Corporate, the following persons form the Committee for the Jadon Place Body Corporate:

Chairperson: Mr Graeme Thomas

Secretary: Mr Colin Lamont

Treasurer: Mr Jeff Nessen

Ordinary Members: Mr Bob McKee

Mr Max Meinhold

Mr Jack Setches

Mrs Wilma Jaggers

I further order that the above order relating to membership of the Committee expires on 30 June 2003.

I further order that the application for a declaration that an extraordinary general meeting of the Body Corporate held on 2 February 2003 is void, is dismissed.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0037-2003

"Jadon Place" CTS 11184

1. Orders sought in the application

The Applicant, a Co-owner of Lot 12, has sought the following adjudicator’s orders under the Body Corporate and Community Management Act 1997 ("the Act"), quote-

" (A) That the proposed EGM on 2^nd February 2003 be declared illegal.

(B) That all positions on the committee of management of the Body Corporate be declared vacant and new elections be held.

(C) All future elections should be held under the supervision of the Commission or2n similar independent body."

The Applicant also sought an interim order preventing the Body Corporate from holding the extraordinary general meeting scheduled for 2 February 2003.

Section 276(1) of the Act provides that adjudicators may make just and equitable orders, including declaratory orders, to resolve disputes in the context of community titles schemes, 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)).

2. Scheme details

The "Jadon Place" community titles scheme was originally created under a building units plan of subdivision (now known as a building format plan) registered on 20 March 1981. A new community management statement for "Jadon Place" was recorded on 20 July 1999. The community management statement indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 ("the Accommodation Module") applies to the scheme.

While "Jadon Place" physically consists of 16 lots and common property, the scheme is the subject of a time-share arrangement. As a result, there are a significant number of co-owners of each lot included in "Jadon Place".

It seems to me that the current legislation does not specifically contemplate the operation of a community titles scheme that is the subject of this type of time-share arrangement, resulting in some very real practical difficulties for these types of schemes.
For example, it seems to me that it is arguable that the practice of the "Jadon Place" Body Corporate to allow one vote per week of ownership to each of the co-owners of lots included in the scheme at general meetings is contrary to provisions of the legislation that state that only one vote must be exercised for each lot included in the scheme (see sections 105(2), 106(2), 107(2), and 108(2) of the recently renumbered Act). However, as this matter is not raised as an issue in this application, I do not consider that it is appropriate for me to make any determination or further comments about it at this time.

3. Application, interim order and submissions

This dispute resolution application was made on 16 January 2003. On 22 January 2003, a staff member of this Office wrote to the Applicant on behalf of the Commissioner for Body Corporate and Community Management ("the Commissioner"), and requested the Applicant to provide further information in relation to the application. This information was provided to this Office on 24 January 2003, under cover of a letter dated 23 January 2003.

On 23 January 2003, prior to referring the application to an adjudicator for consideration for an interim order, the Commissioner invited the Committee for the Body Corporate to make a written submission about the application. In the notice inviting the Committee to make a written submission about the application, it was noted that further information was pending in relation to the application. The further information provided by the Applicant on 24 January 2003 was forwarded to the Body Corporate on the same day. The Committee, and individual committee members made submissions about the application in response to the Commissioner’s invitation.

On 31 January 2003, a Departmental Adjudicator issued the following orders in respect of the application for an interim order:

"C G YOUNGI hereby order that the body corporate must not implement or otherwise act upon, whether by execution of the management agreement or otherwise, any resolution passed in respect of Motion 1 at the extraordinary general meeting of the body corporate to be held on 2 February 2003, pending determination of this application by final order.

I further order that the third order sought under the application, namely –

All future elections should be held under the supervision of the Commission or similar independent body,

is dismissed.

I further order that –

(a) at the commencement of the meeting on 2 February 2003, the chairperson is to read the contents of this order to the persons in attendance; and

(b) no later than three (3) weeks after the meeting, the body corporate secretary, or alternatively the chairperson, must forward a copy of this order and the accompanying "Statement of Adjudicator’s Reasons for Decision" with the minutes of the meeting, to all lot owners." 2n

On 6 February 2003, the Commissioner invited the Committee, and all owners of a lot included in the scheme, to make a written submission about the application, before an initial case management recommendation for the final determination of the application was made. A number of co-owners of lots have provided submissions in response to the application.

On 27 March 2003, the Commissioner made an initial case management recommendation that the application should be the subject of departmental adjudication. The Commissioner has referred the matter to me for determination.

4. Matters in dispute

A large amount of material has been submitted in relation to this dispute resolution application, and a significant number of issues have been raised. In the interests of focusing on, and resolving, the key issues raised by the application, I do not intend to attempt to address all of the secondary and more minor matters that are described in the material.

In addition, I wish to point out to parties that in the course of my consideration of this application I have found it necessary to refer to documents (mainly meeting material) provided by the Committee and other members of the "Jadon Place" Body Corporate in relation to previous dispute resolution applications.

It seems to me that the broad issue raised in this application is whether the extraordinary general meeting of the Body Corporate held on 2 February 2003 was lawfully called. The Applicant has also sought a determination of the composition of the Body Corporate Committee. The Applicant has raised a number of key issues in support of his position that the extraordinary general meeting described was not properly authorised, and should be declared void. In my view, the following are the key issues raised by the Applicant:

•	As there was confusion about the proper composition of the Committee, the persons who called the meeting were not authorised to do so,
•	Some committee members were not properly consulted concerning the decision to call the meeting,
•	Two committee members who voted in favour of calling the meeting had a conflict of interest in the issue, and should have refrained from voting,
•	The calling of the meeting was contrary to earlier decisions of the Committee and Body Corporate at general meeting,

I will consider these issues below in Determination.

I note that in determining the application for an interim order, the Adjudicator dealt with the Applicant’s further request for an independent body to supervise all future committee elections for "Jadon Place". In his statement of reasons, the Adjudicator made the following comments:

"Finally, the applicant seeks as a third order that this office or a similar independent body supervise all future committee elections for the scheme. I have dismissed this part of the application as, firstly, the Act does not empower this office to directly participate in the affairs of a scheme, and secondly, because the body corporate can itself employ an independent Returning Officer under section 52 of the Accommodation Module, and/or can have the election determined by secret ballot. Also, scrutineers can be appointed to oversee the conduct of a meeting. These are all measures that the body corporate can undertake itself – the applicant may propose motions to this effect."

I agree with the Adjudicator’s comments on this part of the application, and I do not intend to consider it further.

5. Determination

I will now turn to what I consider to be the key aspects of this dispute resolution application.

5.1	Committee membership

In order to put this issue in context, it is necessary to briefly outline some background to the membership of the current purported Body Corporate Committee, which consists of Mr Graeme Thomas as Chairperson, Mr Colin Lamont as Secretary, Mr Jeff Nessen as Treasurer, and Mr Bob McKee, Mr Max Meinhold, Mr Jack Setches, and Mrs Wilma Jaggers as ordinary committee members.

I understand that the Body Corporate held its last annual general meeting on 2 June 2002. I have examined the minutes of this meeting, which record that Mr Lamont was elected as Chairperson, and Mr Thomas, Mr McKee, Mr Meinhold, Mr Setches and Mrs Jaggers were elected as ordinary committee members. The minutes do not record the result of the election of Secretary or Treasurer for the Body Corporate, however, it appears from the material that Mr Nessen filled these positions.

The material reveals that a number of owners were concerned about the conduct, and outcomes of the annual general meeting. However, I do not intend to consider any issues concerning this meeting in the context of this application. It seems to me that if owners were concerned about the conduct or outcomes of this meeting, they should have made a dispute resolution application to this Office within 3 months of the date of the meeting (section 242 of the Act). To interfere with the outcome of the meeting at this stage would, in my view, be unduly disruptive to the Body Corporate, and would detract from the certainty that section 242 is intended to afford to bodies corporate.

Shortly after the annual general meeting, it appears that the possibility of Mr Lamont resigning from the position of Chairperson arose. In this regard, I refer to a letter dated 3 June 2002 to Mr Michael Jukes from Mr Lamont. It appears that Mr Lamont intended to forward this letter to the owners generally. In this letter Mr Lamont expresses views concerning the conduct of the annual general meeting and relevantly states: "After sleeping on it, I have decided I will step down from the chair." Mr Lamont contemplates Mr Jukes filling the position of Chairperson.

In a later unsigned letter dated 6 June 2002 to Mr Jukes, Mr Lamont clarifies that he had not actually resigned as could be implied by his previous letter, however goes on to state "I am therefore now willing to have my resignation tabled at a committee meeting in my absence subject to the council’s acceptance of your nomination". This position seems to be supported in a document titled Harmony at Jadon in which Mr Lamont states that he has decided to "stand down from the chair" and that he is happy to announce that Mr Jukes has agreed to fill the position of chairperson.

However, it is apparent from the material that Mr Lamont changed his mind regarding his resignation from the position of chairperson. The reasons for Mr Lamont’s change of mind are, in my view, largely irrelevant. In support of his claim to the position, Mr Lamont states that he did not effectively resign from the position, as he did not give the Body Corporate Secretary written notice of his resignation as required by section 23(2)(c) of the Accommodation Module. Mr Nessen (the then Secretary) supports this statement in a statutory declaration dated 27 February 2003.

I agree with Mr Lamont’s position that the legislation requires a written notice to be given to the Secretary (or chairperson) before a resignation is effective.
I also accept Mr Nessen’s statement that Mr Lamont did not give him a notice evidencing his resignation. Therefore, in light of the information presented to me I do not consider that Mr Lamont effectively resigned from the position of Chairperson, and was not effectively replaced by Mr Jukes. However, I would also go on to state in light of the correspondence described above, Mr Jukes, and all other owners, could certainly be forgiven for being uncertain as to the point at which Mr Lamont’s decision to resign was intended to become effective, and whether or not Mr Lamont was legitimately continuing as chairperson.

It appears that a committee meeting was held on 16 June 2002, shortly after the annual general meeting. The minutes of this meeting indicate that the Committee accepted Mr Lamont’s purported resignation, and also decided to call an extraordinary general meeting to reconsider all committee positions. The minutes indicate that the committee appointed Mr Jukes to act as an "interim chairperson" until the extraordinary general meeting was held, and the composition of the committee determined by the members of the Body Corporate. It is apparent from the material that an extraordinary general meeting was proposed for 4 August 2002.

In dispute resolution application 0450-2002, Mr Lamont challenged the validity of the 16 June 2002 committee meeting, and the extraordinary general meeting scheduled for 4 August 2002. On 2 August 2002, an Adjudicator issued interim orders in relation to this application. While the Adjudicator allowed the extraordinary general meeting to proceed, he issued an interim order restricting the Body Corporate from carrying out any resolutions of the 16 June 2002 meeting or the 4 August 2002 meeting, pending a final determination of the application.

From the material, I understand that after Mr Lamont conveyed information about the interim orders to the persons present at the 4 August 2002 meeting (there is some dispute about how the terms of this interim order were conveyed to persons at the meeting by Mr Lamont), the meeting was effectively abandoned. While I accept that owners may have decided to remain at the meeting venue and discuss various matters, I do not consider that the Body Corporate could make valid decisions at this meeting after it was formally abandoned, regardless of whether or not Mr Lamont misled owners about the effect of the interim orders. For this reason, I do not consider that it is necessary for me to assess or determine the manner in which Mr Lamont explained the interim orders to owners.

A final determination of the validity of the committee meeting held on 16 June 2002 and the extraordinary general meeting held on 4 August 2002 was never made because Mr Lamont withdrew the application before a final order was issued. Therefore, it seems to me that at this point, the committee was still properly comprised of the persons chosen at the annual general meeting of 2 June 2002.

However, it is apparent that the composition of the Committee was further considered at a committee meeting held on 11 August 2002. The minutes of this meeting indicate that there was a rearrangement of committee positions. Specifically, the Committee carried the following motion:

"That this meeting agree that Mr Colin Lamont be allowed to vacate the chair in favour of Mr Graham Thomas, and that Mr Nessen be allowed to vacate the position of secretary, and Mr Lamont be appointed secretary and the vacancy created by Mr Thomas taking the chair be filled by Mr Michael Jukes"

The inclusion of Mr Jukes as a committee member would bring the total number of members of the committee to 8, which is in excess of the maximum number of committee members allowed under section 10(3) of the Accommodation Module. I note however, Mr Lamont’s statement that upon realisation of this error, Mr Jukes was excluded as a member of the committee (although he was permitted to attend meetings as an observer). It does not appear that Mr Jukes exercised a vote at a committee meeting regarding any matters relevant to this application.

Therefore, after this meeting it appears that the Committee consisted of Mr Thomas as Chairperson, Mr Lamont as Secretary, Mr Nessen as Treasurer, and Mr Meinhold, Mr Setches, Mr McKee, and Mrs Jaggers as ordinary committee members ("the reconstituted Committee").

While Mr Lamont has rightly relied on the strict terms of section 23(2)(c) of the Accommodation Module as grounds for arguing that his resignation from the position of chairperson was ineffective, I have not been presented with letters from Mr Lamont, Mr Thomas or Mr Nessen evidencing their formal resignation from their original elected positions. In the interests of consistency, it seems to me that in the absence of such formal written notice given to the Secretary or Chairperson, it is doubtful that the positions were properly vacated and therefore should not have been filled.

While I am not certain that these members properly vacated their positions, either way, I would not disrupt the composition of the reconstituted Committee, or previous decisions of this Committee, on this basis. My reasons for this decision are as follows. Firstly, no new members of the Committee have been introduced as a result of the rearrangement, therefore the Committee consists of the same persons (some albeit in different positions), as were chosen by the Body Corporate at the 2002 annual general meeting. Secondly, and more importantly, the Body Corporate will soon have an opportunity to reconsider committee membership at its annual general meeting. In the circumstances, it seems unnecessarily disruptive at this point to require the Body Corporate to convene a meeting to choose committee members in such close proximity to the annual general meeting. Finally, in my view, there was no timely, formal objection to the rearrangement of committee positions.

In the circumstances, I consider that the reconstituted committee described above was a valid committee of the Body Corporate at the time the extraordinary general meeting of 2 February 2003 was called.

I will now turn to the process of calling the extraordinary general meeting of 2 February 2003.

5.2	Calling the meeting

As part of the supporting grounds of this application, the Applicant has provided a copy of an extract of the notice of extraordinary general meeting of the Body Corporate for 2 February 2003. The agenda for the meeting includes two motions, firstly a motion concerning the adoption of a new management agreement and secondly, a motion to confirm membership of the Committee.

I also have before me a copy of the minutes of the extraordinary general meeting of 2 February 2003, which record that motion 1 (presumably regarding the management agreement) was carried with 229 votes in favour, and 82 votes against. The minutes record that motion 2 was carried with 230 votes in favour and 77 votes against.

I understand that the Committee’s decision to call the extraordinary general meeting was made outside a committee meeting as permitted under section 33 of the Accommodation Module. This process is commonly referred to as a "flying minute". The Applicant has provided a copy of the flying minute, which proposes the following motion:

"That owing to a division of opinion on the committee in respect of implementing the instructions of owners as indicated by their vote at the 2002 AGM, a general meeting should be called to give owners the choice of adopting a new management agreement as they decided at the AGM or rescinding their previous decision."

The flying minute has a closing date of "Friday 10th Jan ", I assume of 2003. Mr Lamont states that 5 votes were received supporting the motion, and 2 votes were received opposing the motion.

Section 33 of the Accommodation Module allows committees to decide motions outside of committee meetings. Specifically, section 33 provides the following:

"33.(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."

In the supporting grounds to the application, the Applicant argues that the decision to call the meeting was contrary to an earlier decision of the Committee on 8 December 2002. It seems to me that the legislation allows earlier decisions of a committee to be altered or revoked by later decisions of the committee, including by using the flying minute process. As such, I do not consider that the Committee was bound by its decision on 8 December 2002.

The Applicant also states that two of the Committee members (Mrs Jaggers and Mr Setches) were not properly consulted regarding the proposal contained in the flying minute. In her submission, Mrs Jaggers states that she received the flying minute on 7 January 2003, and returned it to the Secretary on 10 January 2003. Mrs Jaggers rightly points out that the notice of extraordinary general meeting for 2 February 2003 is dated 7 January 2003, before the closing date for the flying minute.

As can be seen from the terms of the section 33 outlined above, there is no specific period of notice for flying minutes. In addition, there is no stipulation that the flying minute process can only be used in an emergency. Rather, all committee members simply have to be given notice of the proposal. Once a majority of voting members agree to the motion, it seems to me that the proposal may be carried out. While I appreciate Mrs Jagger’s concerns in this regard, and personally consider that the flying minute process should only be used where it is impractical to call a proper committee meeting, the process followed in this instance does not appear to be contrary to the provisions of the legislation.

Finally the Applicant expresses a view that Mr Lamont and Mr Nessen had a conflict of interest in determining the matter. It seems obvious to me that Mr Nessen had a very personal and direct interest in the Committee’s decision to call an extraordinary general meeting of the Body Corporate for the primary purpose of deciding whether to authorise a new service contract with Mr Nessen.
I consider Mr Nessen had an obligation to refrain from voting on the motion in accordance with section 32(2) of the Act.

The Applicant’s description of Mr Lamont’s alleged conflict of interest is somewhat less clear. It appears that the Applicant considers the Mr Lamont’s spouse’s association with the service contractors formed a conflict of interest for Mr Lamont’s consideration of whether or not to call the extraordinary general meeting. Mr Lamont seems to confirm in his submission that he is related (albeit through marriage) to two of the contractors (Mr and Mrs Owen). While Mr Lamont’s potential personal interest in a decision to call the extraordinary general meeting to consider a new service contract is much less direct than Mr Nessens, I do consider that it would be reasonable for owners to perceive that Mr Lamont’s support of the decision to call a general meeting may have been at least partly motivated by a desire to assist his relatives. In making this comment, I am not dismissing Mr Lamont’s statements that the meeting would assist the Body Corporate by resolving a contentious issue, however, to be prudent, I would suggest that Mr Lamont should have abstained from voting on the matter.

In any event, as the Adjudicator considering the interim order observed, even if Mr Nessen and Mr Lamont’s votes are excluded, the motion to call an extraordinary general meeting of the Body Corporate is still carried by the Committee with 3 votes in favour and 2 votes against. Therefore, I do not consider that this issue is grounds for invalidating the 2 February 2003 meeting.

In summary, I am not satisfied that the Applicant has demonstrated sufficient illegality or irregularity in the calling of the meeting that would warrant an order declaring the meeting void.

6. Conclusion and Comments on dispute resolution application reference number 0102-2003

For the reasons outlined above, I intend to dismiss this application. In accordance with section 279(2)(d)(iii) of the Act, the interim order issued in relation to this application now lapses.

However, as the parties to this application are aware, this is one of two dispute resolution applications currently before this Office concerning the extraordinary general meeting of the "Jadon Place" Body Corporate on 2 February 2003. While I have dismissed this application (0037-2003), parties should be aware that application 0102-2003 also seeks declarations that the 2 February 2003 meeting is void, and that the resolutions passed at the meeting are invalid. My dismissal of this application (0037-2003), which concerns the calling of the meeting, should in no way be taken as an indication of my views of the merits of application 0102-2003, which seems to be more concerned with the conduct of the meeting. Application 0102-2003 is currently pending determination, and will be finalised in due course.

While my dismissal of this application brings the interim order issued on 31 January 2003 in relation to 0037-2003 to an end, and no interim order has been sought or made in relation to application 0102-2003, in my view it would be prudent for the Body Corporate to refrain from implementing motion 1 as resolved at the 2 February 2003 meeting, until application 0102-2003 is finalised. Otherwise, it may be difficult and costly for the Body Corporate to remedy the consequences of executing a new management agreement, if the 2 February 2003 meeting is ultimately declared invalid. It seems to me that the Body Corporate should also consider the implications of the situation on potential third parties to the agreement, such as financiers.