Walton Court [2003] QBCCMCmr 511 (14 May 2003)

Last Updated: 10 September 2007

C G YOUNGREFERENCE: 0634-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	6304
Name of Scheme:	Walton Court
Address of Scheme:	26 Lather Street, SOUTHPORT QLD 4215

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Anthony Edwin HARROLD, as the owner of Lot 2,

C G YOUNGI hereby order that the election of the committee at the annual general meeting held on 2 October 2002 is void, however the persons purported to have been elected will under the authority of this order continue to hold the powers of their respective positions but may only exercise those powers to meet necessary expenses of the body corporate and to carry out the terms of this order.

I further order that within fourteen (14) days of the date of this order, the secretary must –

• give a copy of this order and the accompanying reasons to each owner of a lot in the scheme; and

• give proper notice to each owner inviting them to nominate for positions on the committee, allowing a period of three (3) weeks for nominations to be received by the secretary,

and then -

• as soon after the closing date for nominations as is reasonably possible, the secretary must provide to owners a ballot paper showing the nominees for each of the committee positions and allow a period of three (3) weeks for completed ballot papers to be received by the secretary; and

• as soon as possible after the closing date for receiving ballot papers, the committee, in the presence of any owners who wish to scrutinise the ballot count, must count the ballot votes and declare those persons elected to the various positions of executive or ordinary membership. 2n

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0634-2002

"Walton Court" CTS 6304

The applicant, Anthony Harrold of Lot 2, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") -

"An order is sought to declare the AGM held on the 2^nd October 2002 to be invalid on the grounds that all of the interested parties were not notified of the meeting and nominations were not sought for the committee positions.

A further order is sought for the immediate audit, by an independent body, of all accounting records and books of the body corporate. This order is on the grounds that notices issued to body corporate members of financial dealings have little detailed information on the expenditures by the committee. Specifically, detailed accounting of all outlays by the committee, on behalf of the body corporate, for the calendar years 2001 and 2002 is sought."

JURISDICTION:
This is a dispute between an owner (the applicant Harrold) and the body corporate (the respondent), concerning the validity of a general meeting of the body corporate, and the audit of body corporate records. These are matters falling within the disputes 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 AND SUBMISSIONS:

In accordance with the requirements of section 243 of the Act, a copy of the application was provided to the respondent body corporate (committee) and to the other owners, with an invitation to respond to the matters of dispute raised in the application. The committee made a submission, as did Susan Parker of Lot 5. The applicant obtained a copy of submissions privately and subsequently made a written reply to the submissions (see section 244 of the Act), though the only matter he addressed was his alleged use of the basement garage area for cabinet making purposes.

The information provided in the application (including attachments) and reply, the submissions, and in discussion with certain parties (see under heading "Determination" regarding scheme visit), is as follows. The applicant states that two other owners, Parker of Lot 5 and Sims of Lot 6, have informed him they did not receive notice of the annual general meeting held on 2 October 2002. The previous annual general meeting was held some two years ago. Also, Jones of Lot 3 and he, though both received the notice of meeting, did not receive an invitation to nominate for the committee and as a result both Mr and Mrs Walton and their son now constitute the committee.

The committee states that a notice of meeting was forwarded as usual to Sims’s property agent, Mark Doherty Real Estate Southport, who have informed Noel Walton (chairperson) they onforwarded it to Sims at his Singapore address, not knowing that Sims was absent on a trip and did not receive it. In regard to Parker, Body Corporate Services Pty Limited (who convenes and conducts the scheme’s meetings) sent the notice to her old address. Noel Walton (hereafter "Walton") admitted this was an error, as her new address had not been passed on.

The applicant also complains that body corporate moneys have been spent on alterations to the exterior wall and adjacent area of Lot 1 (Walton), though other owners had not been consulted about the work. The committee states in his submission that the repairs, including the replacement of the garden, was necessary because of water penetration through the external wall into the stairwell area. The garden bed had to be eliminated because it was acting as a pond – it was filled and tiled over.

The applicant further complains that the common property power point located in the basement garage has been removed, again without consultation with the other owners. The committee states that the applicant Harrold had been using the power point in a home workshop he had set up in a vacant garage space (Lot 1). Walton said he told Harrold to stop using the garage space as he did not have the authority of the tenant in Lot 1 (an aged lady), and although it was mostly vacant, the space was needed for when government aid employees visited her. He had also asked Harrold to stop using the community power point for his workshop. Also at Christmas time, Jones of Lot 3 had connected a cord from the power point to a refrigerator in her garage. When Harrold failed to comply with either request, Walton erected a chain across the Lot 1 garage space and disconnected the supply to the power point. In his reply to the committee submission, Harrold said he only used the power point for work on alterations to his lot kitchen and wardrobes.

DETERMINATION:

The scheme "Walton Court" was registered as a building units plan (now termed a building format plan) on 8 February 1989, and comprises seven lots. The developers, Noel (Lacy) and Merle Walton, still own three lots in the scheme, namely Lots 1, 4 and 7.

In order to better understand the matters in dispute and the positions of the parties, on Monday 12 May 2003 I visited the scheme. I inspected the problem areas in the presence of Walton, his son (MN Walton) and Harrold (with a brief talk with Jones) and discussed the disputes with them.

From my discussion with the parties, it seems that there was no notification sent to owners seeking nominations for committee positions and inviting owners to submit motions for inclusion on the agenda for the annual general; meeting, as required by sections 13(2) and 41(3) of the Standard Module regulations. This is a fundamental failure in affording owners their voting rights and the committee elected at the meeting has no legitimacy. My order is therefore that the election is void. A fresh election needs to be conducted and that is provided for in my order.
Normally the nominations and the meeting must be called within defined time limits of the end of the financial year of the body corporate, however as those times have now passed, alternative provisions have to be made. I have nominated times for the various stages of conducting the ballot, and have also provided that no general meeting need take place for the count of ballot votes but that the committee will carry out this task. This will simplify matters. I have also provided that any owner can be present as a scrutineer of the count.

The purported proxy from Sims in favour of Harrold, was inadequate in terms of the legislation’s requirements. A blank form containing the appropriate requirements was attached to the notice of meeting (as required by the legislation). If Sims wishes to give a proxy to Harrold for voting purposes, then he may do so on this form – however they, and owners generally, should note that a proxy can be used for voting on motions only and cannot be used for voting in an election ballot (see section 74(3)(c) of the Standard Module). As well, an owner in this scheme (being one having under 20 lots) cannot hold more than one proxy (see section 72(4)(b) of the Standard Module). Furthermore, a proxy is only valid for a maximum of one year as regardless of when they are given, they lapse at the end of the body corporate’s financial year (see section 73(1)(e) of the Standard Module).

In regard to the invalidation of the annual general meeting sought by the applicant Harrold, I have made no order for this (though there will be a fresh election) for the following reasons. Firstly, the proxy from Sims was not a valid one; secondly Jones did not attend the meeting (mainly because of the Walton family members being elected unopposed to for the committee) – as did Harrold. Accordingly, even if Parker had received the notice (as she should have) and had voted against the motions, the motions would still have passed. Apart from that, the only resolutions of substance passed at the meeting comprise the sinking fund and administrative fund budgets, and confirmation of insurance policies. If other owners nominate for committee (which can have a maximum of seven members) and, as is most likely, obtain positions, then they will be in a position not only to oversee the expenditure of the body corporate but also to be part of the decision-making.

In regard to the audit of the body corporate records, at my visit I informed the applicant of his right under the legislation to inspect all of the records of the body corporate, including any financial record (see requirements for searching body corporate records contained in section 205 of the Act). Accordingly, the applicant can satisfy himself regarding past expenditure by actually viewing the records (ie , invoices, cheque details, service agreements, etc.).

During the visit, Walton was able to explain to the applicant why the repair work to the external wall and adjacent garden area (see previous comments) was necessary, and show the cost relating to each part of the work carried out. The applicant stated that this was the first time he had known of the reason for the work and the various costs involved, as only the total amount for the work was shown in the annual Statement of Accounts (see section 105 of the Standard Module). I also informed Walton that as the cost was in excess of the "relevant limit for major spending" under section 104 of the Standard Module (7 lots x $200 =$1,400 per project), then at least two quotes for the project work should have been obtained and the alternatives put to the owners in general meeting for their decision. Similarly, items of expenditure over the "relevant spending limit for committee" (7 lots x $100 = $700) for each proposal (ie, purchase, payment, fee), must be decided in general meeting. These restrictions must be adhered to in the future.

In regard to the power point, this is a common property facility that is usual in garage basements for the use of occupiers (owners and tenants) in vacuuming the insides of vehicles. Other reasonable uses of the power source would only be in respect to a short-term, once only type use, such as a power tool to repair or modify a vehicle part.
It is not intended to be used by an occupier for personal purposes beyond this as the cost is a body corporate one shared amongst owners, and it would obviously be unfair for an owner to incur unreasonable power costs that others must largely fund. Accordingly, use of the power point by the applicant to build kitchen and wardrobe furniture, and to cut wood for work purposes for a brief period, was not reasonable. Also, the disconnection of the power point should have been a decision of owners; perhaps owners will want it restored, but with all occupiers (and new ones in the future) on notice as to its limited use.

Although not part of the orders sought, the matter of maintenance was raised during my visit, particularly dissatisfaction with the 3-weekly cleaning of the stairwells. A proper duty statement should be drawn up with the contractor cleaner, which sets out all of the tasks required of the cleaner and their frequency. Obviously owners in residence will be better able to observe the frequency and standard of work, and some monitoring arrangement by the committee could include one or more of them. This could be an item of discussion at the first meeting of the new committee.