Gazelle Villas [2003] QBCCMCmr 513 (15 May 2003)

Last Updated: 10 September 2007

RA MeekREFERENCE: 0126-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	21183
Name of Scheme:	Gazelle Villas
Address of Scheme:	93-97 Logan Street BEENLEIGH Q 4207

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

Barry Morton Scott, the owner of lot 17, Douglas Alan Holding, the owner of lot 67, and Edward Franz Reye, the owner of lot 68


RA MeekI hereby order that the AGM of the body corporate called by the secretary, K Elliott, and held on 13 March 2003 is invalid, and all resolutions purported carried at the meeting and the election of the committee conducted at the meeting are of no effect.

I further order that a new AGM shall be held in accordance with the terms of this order.

I further order that until an AGM convened in accordance with the terms of this order is held, that the members of the former committee, namely Barry Scott, Douglas Holding, and Edward Reye, (the appointed committee) but not including Kim Elliott, the secretary, shall be the committee of the body corporate, for the purposes of convening a new AGM.

I further order that the secretary, Kim Elliott shall immediately deliver to the appointed committee all body corporate books and records as are maintained in a written or hard copy form, and further, the secretary, Kim Elliott shall provide to the appointed committee immediately upon request by it, all body corporate information which is maintained in an electronic form and which is required by the appointed committee to undertake the requirements of this order.

I further order that the secretary, Kim Elliott, nor the body corporate manager shall charge to the scheme any fee for complying with the terms of this order, or take any objection to the provision to the appointed committee of body corporate information required to be provided by the secretary in accordance with the terms of this order.

I further order that the appointed committee is appointed to call, hold and chair a general meeting (the meeting) of Gazelle Villas within two (2) m6onths of the date of this order for the purpose of the consideration of motions included on the agenda of the meeting, and the election of the executive members of the committee and the ordinary members of the committee, if any, who shall hold such positions, subject to section 25 of the Body Corporate and Community Management (Standard Module) (the standard module), until the next annual general meeting is held.

I further order that, for the purposes of convening, holding and chairing the meeting, the appointed committee shall have all the powers, authorities, duties and functions of the chairperson, secretary and treasurer of the body corporate, with the exception of the following powers -

1. to further delegate any of those powers, authorities, duties and functions to another; or

2. to make any decision on a restricted matter within the meaning of section 26 of the standard module; or

3. to incur expenditure, in respect of a single project, beyond the relevant limit for committee spending.

I further order that, subject to the secretary Kim Elliott providing the requisite information to the appointed committee (eg. list of owners names and addresses etc), within seven (7) days of the appointed committee receiving a copy of this order, the appointed committee must give a copy of this order to each person whose name appears on the roll as the owner of a lot included in the scheme (lot owners).

I further order that lot owners shall have the right to submit to the appointed committee, motions for inclusion on the agenda for the meeting; and

a)	if the lot owner is an individual - to nominate the lot owner or another individual for election as a member of the committee; and
b)	if the lot owner is not an individual - to nominate an individual for election as a member of the committee;

Provided that

a)	the motions and / or nominations are received by the appointed committee within twenty-one 7(21) days from the date of this order; and
b)	the motions and / or nominations are otherwise in accordance with the requirements of the standard module;

then the appointed committee shall include the motions on the agenda of the meeting, or nominations on the ballot for election as members of the committee.

I further order that the appointed committee shall not give notice of the meeting until after the expiration of 14twenty-one (21) days from the date of this order.

I further order that -

a)	at least 7twenty-one (21) days notice of the meeting must be given to lot owners,
b)	notice of the meeting is to be given in accordance with section 42 of the standard module;
c)	the agenda of the meeting must include the items set out in section 45(2) of the standard module, and the meeting may determine any other motion validly before it; n
d)	the procedure for the conduct of the election for the committee at the meeting shall be by open ballot in accordance with section 17 of the standard module; and
e)	except as provided for in this order, the meeting and all related matters must be conducted in accordance with the standard module.

I further order that the appointed committee shall hold the appointment for the period beginning from the date of this order until the completion of the meeting.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0126-2003

"Gazelle Villas" CTS 21183

The applicants Barry Morton Scott, the owner of lot 17, Douglas Alan Holding, the owner of lot 67, and Edward Franz Reye, the owner of lot 68, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

I am seeking an order to achieve the following outcomes:-

1. To invalidate the AGM called by Complete Body Corporate Services (CBS) and Kim Elliott;

2. Terminating the services of CBS and Kim Elliott as body corporate manager and secretary respectively;

3. Authorising and empowering the committee of B Scott, E Reye and D Holding to call a new AGM and prior to that call for new motions and nominations for committee;

4. An order recognising that the actions of CBS and Kim Elliott have been contrary to the interests of the body corporate and that as a direct consequence these present applicants and the body corporate have been put to unnecessary expense.

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 the engagement of a person as a body corporate manager or service contractor or the authorisation of a person as a letting agent.

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 or consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The applicants also sought interim orders, initially in the same terms as the final orders sought above. I dismissed the application for interim orders on this basis, stating –

The applicants have sought final orders by way of interim relief. There is nothing injunctive in the nature of the relief sought. Rather, the applicants seek a final resolution of the dispute at an interim stage. The nature of the matters raised in this application are not such that they can be effectively addressed or dealt with by way of an interim order. Rather, they require full investigation, including submissions from other parties to the dispute, before any order can be made. Accordingly, this application for an interim order is dismissed.

Following the making of the interim order, it was brought to my attention that the applicants had in fact amended the interim relief they were seeking to request –

1. To postpone or adjourn the AGM called for the 13^th March until such time as a final order is made, or alternatively;

2. To suspend the effect of any motions passed at the AGM, if it should be held on the 13^th March, until such time as a final order is made and to allow any such motions passed to then have effect only in accordance with the terms of the final order

3. Declaring the committee’s revocation of the 11^th February of the body corporate manager’s power to call the AGM to be valid. ...

In hindsight, and after having read all the material for the purposes of the making of this final order, I consider that had I been aware of the amendment to the interim orders requested, I would have been disposed to the making of an order in terms consistent to some extent with what the applicants were seeking. The reasons for this will become apparent from this statement of reasons.

Subsequent to the making of the interim order, this office initially sought submissions in relation to the application from the body corporate committee and the body corporate manager. As submissions were not sought until after the AGM was held, the newly elected committee, which opposes the orders sought by the applicants (being three members of the previous committee) has responded. I note that the new committee oppose the application. The applicants also sought that submissions be sought from all owners. In the circumstances of the application, I considered this a reasonable request, and sought submissions from all owners regarding the application. Two of 65 owners did respond.

The submission of the new committee, after canvassing the dispute generally, concludes –

Quite clearly, the majority of owners do not support the orders sought by Messrs. Scott, Reye and Holding and indicated by their voting at the AGM. The current committee (and majority of owners) do not agree with the path that the former committee was taking Gazelle Villas and, as a result they have not been re-elected. It is our view that even if the Commissioner ordered invalid our recent AGM and a fresh one held it is unlikely the outcome would differ. ...

It is our view that the orders sought by Messrs Scott, Reye and Holding are not in the best interests of the owners of Gazelle Villas and as such, we respectfully request that they be dismissed forthwith. We urge you to acknowledge the fact that the majority of voices for Gazelle Villas have spoken and that no matter how well intended the former committee’s submission to you may be, they are not acting on our behalf.

I have noted the contents of the minutes of the AGM held on 13 March 2003; in particular the election of a new committee not including any member of the previous committee (excepting the secretary / treasurer), and the re-election of the former body corporate manager, Complete Body Corporate Services Pty Ltd, as manager. I have also noted the seeming majority of votes in favour of resolutions the effect of which is contrary to the views of members of the previous committee. I am well aware, and have given consideration to the situation referred to in the above submission; namely that if the meeting etc is invalidated, it may be that the outcome of most if not all motions resubmitted to a further AGM is essentially the same as occurred at the AGM. However for reasons I will now outline, I am simply not prepared to allow the status quo to remain. To do so would send the wrong message to bodies corporate generally, and specifically to body corporate managers that they can ignore the requirements of the legislation and the instructions of properly elected committee members with whom they disagree. I consider that, over a sustained period of time, the secretary K Elliott (Elliott) acted contrary to the legislation, contrary to committee instructions, and contrary to the interests of owners generally, and that her actions should not now be ratified and allowed to stand by dismissal of this application, simply because it may be that motions in the future are determined in a manner consistent with their determination at the AGM.

As part of the grounds to the application, the applicants attached a "list of documents" dating from 23 March 2002 to 13 February 2003. A reading of this material in chronological order painted for me what I considered to be a fairly accurate snapshot in the deterioration of a relationship over this period of time between the committee and Elliott (and particularly between Scott, as chairperson and Elliott as secretary / treasurer), leading to the dispute the subject of the application.

I acknowledge that the correspondence and other documents are those selected by the applicants; however on balance I consider they provide a reasonable accurate reflection of proceedings. There are no gaping holes in the correspondence, except perhaps that between the dates 23 July 2002 and 6 January 2003 which is explained with the statement "between July 2002 and January 2003 the committee was busy with completing its investigations into on-site management options with Mr Willis". It is clear that the dispute essentially arose over one single issue (the issue of the appointment of an on-site manager) which was the subject of motion 10 at the 2002 AGM.

Initially relations between Scott and Elliott were cordial, even polite, and both parties appear from correspondence to be acting within the ordinary scope of their respective roles. This continued, with some slight change in tone until July 2002. The correspondence from January 2003 is completely different and reflects the fully blown dispute which had arisen.

In my view, I consider that Scott, presumably as representative of the committee, approached his role, or at least the issue of the proposed on-site manager, in a focused and pro-active way. There is much correspondence indicating that he sought professional advice from Elliott regarding a whole range of matters concerning the appointment. Initially Elliott was of some assistance, but by May, Scott was stating in correspondence to Elliott that "some six weeks or so have passed since I first wrote to you with a request for assistance to enable the committee to sort out the matter of installing an on-site manager" and noting that "you have not found time to reply". The day after (21 May) Elliott did respond, stating "I have followed up Ian Solomon on your behalf. He has asked me to pass on his sincerest apologies, explaining an existing project in which he is involved has taken a couple of weeks longer than anticipated to conclude". This reply is consistent with Scott’s point that Elliott had taken a considerable period to respond. Moreover, it is suggestive in my view of another point which is in contention between the parties; that Elliott did not reveal the nature of her relationship with Solomon, whom she was recommending to the committee to provide assistance with the on-site management matter. The applicants allege that Elliott did not at relevant times reveal to them the nature of her relationship with Solomon; Elliott alleges that she did. Whilst I am unable to determine this conclusively, on the available evidence, I consider it more likely that the applicants allegation is correct; that Elliott did not disclose her relationship with Solomon to the committee despite recommending him to the committee to assist in the process of selecting an on-site manager. Whilst this is a side issue, I consider it an important one which affected the relationship of the parties. In my view, it placed Elliott in a position of significant conflict of interest between her obligation to act as a member of the committee and in the interests of the body corporate, as determined by that committee and her interest in obtaining a role for Solomon within the body corporate. Subsequently, this had significant adverse consequences for relations between Elliott and the committee, and in my view, compromised her role on the committee.

On 27 May, Scott wrote to other committee members stating –

Enclosed is a letter from Ian Solomon. Apart from referring this man to us Kim Elliott has offered virtually no help at all. I think it is time for us to get on with matters ourselves. ...

Why would Scott refer to Solomon as "this man" if he was aware of the relationship between Elliott and Solomon? In my view, if he had known of the relationship, he might have been more pointed in his growing criticism of Elliott, since not only was this the only help he believed Elliott had provided to date, but this help was tainted so to speak by the fact that Elliott had an interest in proposing Solomon, beyond the interests of the body corporate.

From this point on, it is clear that the relationship between the committee and Elliott began to deteriorate significantly. In spite of this, the correspondence by Scott remains (in my view) focused, at least on the issue of the on site manager, which appears to have consumed much of the time of the committee. He continues to seek from Elliott answers to relevant questions concerning the body corporate’s proposed appointment of an on site manager. These are the types of questions one would expect of a functioning committee seeking answers from a professional secretary to questions concerning the engagement of a service contractor.

Ultimately, and reasonably I believe, the committee approaches another to assist with the engagement of an on site manager. This act crystallises the dispute, and on 9 July, 2002, Elliott writes to Scott in the following terms –

It is most positive the Gazelle Villas Body Corporate Committee Members have identified and determined a need to make a revolutionary change for the betterment of Gazelle Villas as a whole. However, as you are now aware, I hold significant concerns that another body corporate manager is being considered as the appropriate person to bring about desired changes. It is also my view that any other body corporate manager engaged in any way is not only a direct conflict of interest, but is simply not permissible, albeit your reassurance they be appointed for one specific task.

Elliott then virtually applies for the job – "Such a task is well within my grasp ..." before concluding –

My paramount interest is delivering smooth administrative support to the collective of owners of Gazelle Villas. I would happily take on the bringing about a management rights on a negotiated fee for service basis rather than see the committee inadvertently bring about potential conflict between two body corporate managers engaged by the one body corporate.

What Elliott says is wrong – there is no prohibition on a body corporate engaging a second body corporate manager if it chooses to do so. Moreover, whilst the person proposed to be appointed is a body corporate manager, the appointment is not for body corporate management but rather professional assistance with the appointment of an on-site manager. This is perfectly legitimate, contrary to the opinion of and professional advice given by Elliott.

Secondly, Elliott is clearly concerned only for her own position as body corporate manager, and the potential conflict which might arise between her and Willis, notwithstanding that they are engaged for different purposes. Perhaps if Elliott had been more forthcoming in assisting the committee earlier in the appointment of an on-site manager, beyond simply recommending Solomon, it might not have come to be that the committee sought the assistance of Willis in this regard.

From this point on, matters change considerably. Elliott suddenly become pro-active, requesting that Scott return her phone calls left on one date, and offering to the committee to arrange a meeting with "the leading body corporate legal practitioner and (herself)" all at no cost whatsoever. I consider that any prudent person in response to such an offer would ask What’s the catch? The explanation may be as simple as self preservation and self interest on the part of Elliott, but my view is her concern is only for herself and her position, not that of the body corporate. As a member of the committee, all members have an obligation to act in the interests of the body corporate.

Shortly after this, Scott elects not to take up the offer to meet Elliott’s lawyer, and correspondence between the two appears to cease. As indicated previously, this is explained in the list of documents as "the committee was busy completing its investigations into on-site management options with Mr Willis". It is unclear whether the parties communicated, if at all, during this six month period.

Correspondence between the parties resumes on 6 January 2003. After this, the tone is much changed. Scott, on behalf of the committee, seeks that Elliott undertake certain directed functions including the circulation to all owners of a letter by the committee recommending the engagement of an on-site manager. Elliott takes no action to comply with this committee direction. The committee forwards to Elliott minutes of a committee meeting where it resolved that the letter to owners be approved and mailed out as soon as possible. Elliott this time responds, stating that as a member of the committee, she was unaware of any committee meeting nor recommendation to make any management engagements. In effect Elliott refuses to send out the letter to owners. Elliott may have a limited point; that as a committee member she was entitled to notice of the meeting in question. However when weighted against other factors including Elliott’s clear conflict of interest etc in the context of the dispute concerning the on-site manager appointment, and the fact that Elliott is not entitled to vote at committee meetings, I consider the failure to notify Elliott of the committee meeting is of negligible significance in contrast to the fact that Elliott was now seeking to raise technical reasons in order to refuse to comply with legitimate committee directives, and thereafter assumes the right to unilaterally convene general meetings of the body corporate.

The dispute reaches a crescendo in a letter of 23 January 2003 from Elliott to Scott, in which Elliott states that –

I notice you persist with your reference to Ian Willis despite my advices and protests in this regard.

Elliott then concludes -

I think the time has come for you to consider your capacity to discharge the responsibilities as chairman and stand aside to make way for one of the other owners interested in an overall advancement of all owners at Gazelle Villas.

I suggest that it is Elliott in my view who should have been considering her capacity to discharge her responsibilities in a professional manner. Elliott’s actions following this correspondence up to the time of the AGM are simply not acceptable and I refuse to allow Elliott to now succeed in what I consider to be significantly improper actions which show contempt for proper process and authority, actions which contravene the requirements of the legislation, and actions which are not in the interests of the body corporate, including –

• Elliott, without authority, sets herself up as a one person authority within the body corporate, simply by-passing the lawfully elected committee on all aspects (see correspondence of 6 February 2003 for confirmation of this – "As the Gazelle Villas Body Corporate year has now passed triggering the calling of the AGM, I am now preparing end of year accounts and will forwarded (sic) notices as a priority. ... The earliest convening of an AGM is the surest and most expeditious way to bring to an end our differences").

• Refusing to follow or carry out lawful directions of the committee;

• Convening meetings of owners without reference to the committee. This includes the AGM, but as well, the "informal meeting" of 30 January 2003 convened by Elliott which clearly was intended to sure up a support based for Elliott and against members of the original committee (the applicants). Moreover, the meeting essentially confirmed Elliott’s agenda with the introduction of Solomon "who advised owners present of a number of different options available for the complex";

• The failure to involve the committee in preparing the agenda of the AGM which is the responsibility of the committee to arrange.

Elliott’s actions are simply not acceptable in the context of her role and responsibilities in this body corporate. Elliott’s company is the appointed body corporate manager, and Elliott personally is the elected, but non-voting secretary / treasurer. Elliott appears to assume that her role as secretary entitles her to convene meetings of the body corporate without reference to the committee. I consider that the secretary has no such authority. Rather, the secretary is a member of the committee, and must act in accordance with the directions of that committee. It is the elected committee, and not any individual member of that committee, who has the power to undertake the day to day management and operation of the body corporate.

In another order (0179 of 2000) in respect of a secretary seeking to unilaterally convene committee meetings, I reasoned as follows –

This section (27) does give the secretary, or in that persons absence, the chairperson, the authority to call a meeting of the committee. However, the section must be interpreted in the context of the role and purpose of the committee, and the role and power of the secretary within the committee.

The committee is the group of individuals entrusted with the day to day operation and management of the body corporate. Although there are certain specified roles within the committee, the committee is not a hierarchal structure, with the secretary at the apex. Rather it is intended to have an egalitarian or democratic structure where the vote of each member of the committee is of equal value. Whilst there are three executive positions within the committee, these positions are not intended to denote power or authority within the committee, but rather, are intended to provide for the functioning of the committee, and the wider operation of the body corporate.

In this context, it is not intended that the secretary have the power or authority to unilaterally declare when meetings of the committee are to be held. Often, the timing of the next committee meeting is discussed at the preceding committee meeting, and members are able to indicate their availability. Alternatively, before calling a meeting of the committee, the secretary should approach fellow committee members to seek consensus as to when a meeting should be held, and if in fact a meeting need be held at all. Additionally, the secretary should seek the submission of agenda items (if any) from other committee members. In the present case, I suggest that the proposed agenda of the secretary is nothing more than the secretary’s personal list of matters of which he is currently aggrieved. The role of the committee is to deal with the day to day operation and management of the body corporate; not to transact the personal agenda of committee members.

I suggest that until the secretary adopts a more reasoned and reasonable approach, along the lines suggested above, then I consider there is no requirement for the manager to convene the meetings demanded by the secretary. I intend to make no order regarding this matter in terms as sought by the applicant.

Whilst the above statements related to the secretary giving unilateral directions to a manager to convene committee meetings, I consider that the comments made are apposite to the situation of a secretary unilaterally convening general meetings of the body corporate, under the power of the secretary contained in section 40. The consequences of a secretary unilaterally convening general meetings, in contrast to committee meetings, are far more serious in my view, and in breach of the statutory requirement that "the committee must prepare an agenda for each general meeting" (see section 45 of the standard module).

In my reasons for order 0179 of 2000, I concluded with the following comment -

By way of final comment, and as intimated in the reasons provided as part of the interim order, I consider that the personal agenda of the Secretary (which I consider is clearly discernable from the terms of this application, and the various meeting agendas that Mr --- has prepared) is in serious conflict with the requirements of the role of the secretary within the committee. On the information presently available to me, I doubt the secretary is able to resolve this conflict in a way consistent with the effective operation of the committee, and the body corporate generally. If the secretary continues to operate in the manner which he has exhibited to date, I consider that the body corporate should give serious consideration to the removal of the secretary from his position under the provisions of section 25(2) of the standard module, under which a committee member’s position becomes vacant if the member is removed from office by ordinary resolution of the body corporate. y

I consider that the position of Elliott is not significantly different than that expressed above. I reiterate, I consider that the actions of Elliott to be beyond her role and authority, to be motivated by self interest, and to be unprofessional in circumstances where Elliott is paid to give professional advice and assistance to the body corporate by whom she is engaged. Elliott was clearly unhappy with the direction of the committee of which she was a non-voting member, and rather than accept that fact, she took steps, contrary to the terms of the legislation, to override the wishes and directions of the validly elected committee. This is not how a professional body corporate manager should act.

Unfortunately there is no sanction I can impose. The activities of body corporate managers are not currently regulated by statute, and managers are not licensed. However, I do have the ability to bring the impropriety of these actions to the attention of owners via the circulation of the terms of this order. Not only do I intend to invalidate the meeting, and authorise the applicants to convene a new AGM, but I intend to order that a copy of this order and statement of reasons be sent to all owners. What owners make of it is for them. It may by that ultimately resolutions that were passed at the original AGM, are carried again. Moreover, the previous committee (the applicants) might be rejected and a new committee elected. These issues are not my concern. I have determined this dispute as I am required to do. What owners now choose to do in consequence of a fresh AGM being convened is for them to decide. I have concluded that the lawful authority of the applicants, the former committee members, was usurped for reasons that were not justified, and if this statement of reasons only serves to clear the names of the relevant committee members then I consider it will have achieved a satisfactory purpose.

Whilst there are many more observations I might make, and detail I might go into, these reasons are lengthy enough already and serve to convey the general tenor of my view of this dispute. I am not intending to warrant that the applicants acted completely in compliance with the legislation at all times, and the secretary did not.

However, I have concluded that the actions of the applicants were in my view bona fides and in the interests of the body corporate so far as I can ascertain, and that the actions of the secretary, so far as the central issue of the dispute concerning the proposed engagement of an on-site manager was concerned, were in clear conflict to the best interest so of the body corporate. In saying this, I am not warranting the performance of the applicant committee members generally. The application, and this decision, has focused almost exclusively on the matter of the proposed appointment of an on-site manager, which was the cause of the dispute. It may be that the committee focused on this issue to the exclusion of more routine day to day matters. I have not considered their performance on these issues; rather owners will determine this if the applicants should again nominate, or be nominated, for the committee.

The one central point all owners should take from this decision is the confirmation of the principle that the elected committee is responsible for the day to day management of the body corporate, and not any individual member thereof; in particular, not the secretary simply on the basis that the secretary is empower to convene committee and general meetings. The secretary has no right to unilaterally assume the powers and authorities of the committee.