Paloma [2003] QBCCMCmr 7 (3 July 2003)

Last Updated: 17 May 2005

REFERENCE: 0408-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9524
Name of Scheme:	Paloma
Address of Scheme:	93 - 97 Albatross Avenue MERMAID BEACH QLD 4170

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Helen Kable, the owner of lot 6

I hereby order that the application by Helen Kable, the owner of lot 6 for an interim order to declare motion 3 of the EGM to be held on July 4, 2003 for the Paloma Body Corporate out of order, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0408-2003

"Paloma" CTS 9524

The applicant, Helen Kable, the owner of lot 6 has sought an interim order to declare motion 3 of the EGM to be held on July 4, 2003 for the Paloma Body Corporate out of order.

Section 279(1) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances. However, given that an interim order may be made ex parte (ie. without reference to, or submission from the respondent named in the matter), then as a guide, where the circumstances or matters in dispute include matters or allegations not capable of objective consideration, or ready determination, or relate to issues of credibility or character, for example, where an interim order would be inappropriate, then the request for an interim order will be refused. It is a matter for an adjudicator to determine in respect of each application.

There is nothing interim or injunctive in the relief which the applicant is seeking. Although the applicant is applying for an interim order, the terms of the order sought by the applicant are final in their determination of this matter. The applicant seeks that motion 3 to be considered at the EGM of the body corporate to be held on Friday 4 July 2003 be ruled out of order. The applicant seeks to prevent motion 3 being determined by the body corporate in general meeting.

Motion 3 headed Bruce Mitchell Costs Appeal – Body Corporate Costs provides –

That the body corporate ratify the committee decision to oppose the appeal lodged by Bruce J Mitchell Construction against the costs awarded to Monier Wunderlich, payable by his firm; and that the committee be empowered to approve whatever reasonable costs are necessary to finalise this matter, subject to ratification at a subsequent general meeting.

Explanatory Note:
The body corporate has lodged an amount of $2500 with Lambert and Ho Trust Account as deposit for use of a counsel in this matter. Should the appeal fail the body corporate should be awarded costs.

The basis on which a motion must be ruled out of order by a chairperson are set out in section 47 of the standard module, quote –

47 Power of person chairing meeting to rule motion out of order
(1) The person chairing a general meeting of the body corporate must rule a motion out of order if-
(a) the motion, if carried, would conflict with the Act, this regulation or the by-laws, or would be unlawful or unenforceable for another reason; or
(b) except for a procedural motion for the conduct of the meeting, or a motion to correct minutes--the substance of the motion was not included in the agenda for the meeting.
(2) The person chairing the meeting must give reasons for ruling a motion out of order and the reasons must be recorded in the minutes of the meeting.
(3) The persons present and entitled to vote may reverse a ruling given under subsection (1)(a) by passing an ordinary resolution disagreeing with the ruling.

In my view, it is for a chairperson to rule a motion out of order at a meeting on the basis of the requirements of section 47. If a chairperson refuses or fails to so rule a motion, then the validity of that motion, if it is in fact carried at the meeting, can thereafter be determined by an Adjudicator. I do not consider that my role should be to rule a motion out of order so as to prevent its consideration. At most, I consider I that might, in the context of an interim order, order that a motion if carried not be implemented pending a final determination of the validity of that motion, and this is the question I now intend to consider here.

The applicant contends that motion 3 "is not in accordance with the Body Corporate and Community Management Act 1997 nor in accordance with the regulations as set out in the Standard Module". The applicant provides two reasons for this. Firstly that the motion refers to the word reasonable without this term being defined, "and no details of the probable legal costs were forwarded to owners before the EGM". The applicant concludes that the committee is operating outside its authority in requesting approval for subsequent ratification for spending on legal fees without limit and which could amount to many more thousand of dollars. Secondly, the applicant alleges that the committee has clearly assumed that motion 3 will be passed and has already paid $2500 into the solicitor’s trust fund as a deposit on the additional legal fees. The applicant alleges this is over the authority for the committee to spend without obtaining prior approval from the body corporate. The applicant then provides a document which is prefaced with the words – "The committee ... seem to have real difficulty in consistently following the requirements of the Act in managing Paloma affairs. The following are just some of the actions taken by the committee which could contravene the Act". I am not interested in other alleged contraventions. This application will determine the matter stated by the applicant to be in dispute; namely the validity of motion 3.

Submissions in respect of the interim order were sought from the committee. The committee has responded by the chairperson, Michael McCallum. An unsolicited submission has been received from a Nannette Blair. This submission has not been considered in the context of the making of this interim order. I intend to invite submissions from all owners prior to the making of a final order in respect of this application.

The chairperson provides some background regarding legal matters affecting this body corporate. In respect of the current application, he states that –

• The committee has advice that it is within power to approve and conduct a defence to a legal action;
• ... The committee has determined that it is a proper commercial decision to defend this action; ...
• The solicitors for the body corporate also required that the body corporate place the sum of $2500.00 in their trust account to pay a barrister to represent them at the hearing of Mitchells’ appeal;
• Because of the time frame required by litigation, this has been done and approval for this specific expenditure has been sought at the EGM of 4 July 2003. The monies remain in trust. ...
• It is difficult to place an exact figure on the future legal costs of this matter. ...

In the circumstances, I am not prepared to order that if the motion is carried at the meeting, that it not be implemented pending a final determination of this application. I consider that given the subject matter of the motion, and the necessity of the body corporate to defend legal proceedings brought against it, that the matter is largely outside the control of the body corporate. A committee however does have certain constrains on its power to act on behalf of the body corporate. I intend to dismiss the application for an interim order, and to seek submissions on the validity of the motion from all owners, before making a final determination. If at the meeting the motion is carried, all parties should proceed on the basis that the validity of the motion will be determined by my final order to this application.

This matter will now be investigated in accordance with the usual processes undertaken by this office. A final order regarding the application will be made in due course.