Baronnet [2003] QBCCMCmr 73 (19 August 2003)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Cristina Nitopi, the owner of lot 56

I hereby order that the application for an order:

1. That the annual general meeting for the body corporate Baronnet held on 27^th November 2003 (sic) be invalidated thus invalidating all motions passed or lost and also that all positions on the committee be declared vacant thus meaning that all budgets, contracts etc would be reverted to the situation as before the annual general meeting until another general meeting is held as soon as possible.
2. That Mrs Fay Waters (owner/investor in Baronnet for 8 years), be appointed to administer the affairs of the complex solely for the purposes of conducting fairly another general meeting as well as sending out new nomination forms for a new committee. Further to prepare fair, reasonable but sufficient new administration and sinking fund budgets and resubmit all other motions as per annual general meeting with appropriate quotes where necessary and in line with the Act.

is dismissed.

I further order that motion 10, relating to the appointment of David Patrick Atkinson as caretaker for the scheme, purportedly passed at the annual general meeting held on 27 November 2002, was at all times void because it contravened the provisions of section 104 of the Body Corporate and Community Management (Standard Module) Regulation 1997.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0098-2003

"Baronnet" CTS 9557

The applicant, Cristina Nitopi, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):-

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

(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)).

In the supporting grounds the applicant provided background information relating to the annual general meeting and the manner in which it was conducted, as well as referring to various alleged anomalies with voting papers and proxies. In addition, the applicant claimed that prior to the meeting, certain members of the committee had held informal meetings in vacant lots at the scheme, without the knowledge of other committee members or the previous secretary. The applicant also claimed that the motion to appoint a letting agent was not discussed at any meeting at which the previous secretary was present. The applicant expressed the view that a new committee is required for the scheme, because the present committee will send the body corporate bankrupt. The application was supported by 20 owners, who had signed a circular letter to all owners by Ms Nitopi and Mr Krasa, who were the scrutineers at the annual general meeting.

Submissions were sought from the body corporate committee and from the body corporate manager in relation to the interim order. Following the dismissal of that order, further submissions were sought from all owners, apart from those owners who had signed the letter of support for the application.

The body corporate manager and Ms Janes, the solicitor instructed to respond to the application on behalf of the committee, provided detailed submissions as to why the application should be dismissed. Ms Janes conceded, however, that if any motion were to be found invalid, then only that motion should be ruled invalid, rather than having the whole annual general meeting overturned. I do not propose to set out in detail the substance of the submissions, however I shall address each of the allegations made by the applicant, and any relevant rebuttal submitted by the respondents.

I also inspected the body corporate records on 11 March 2003. At the time of the inspection, a separate room was made available to me at the body corporate manager’s premises, where I was provided unrestricted access to all body corporate records, including all of the voting papers, proxies, financial records and other documentation relating to the annual general meeting. No other person was present in the room during my inspection, and at the completion of the inspection, I was provided with copies of such documents as I requested.

Instruction to count votes of unfinancial owners

The applicant claimed that she and the other scrutineer were instructed by the chairperson to count at least 3 votes that were marked with yellow stickers, in spite of these owners being unfinancial. The applicant claimed that these votes were in favour of the "committee’s motions". The applicant did not identify these allegedly unfinancial voters.

The new body corporate manager, Cambridge Management Services (CMS), in a submission dated 28 February 2003, responded to this allegation as follows:

No financial records were present at the meeting to determine who was financial and who was not financial. The chairperson, without the appropriate evidence, was unable to declare owners unfinancial and therefore they were deemed to be financial until proven otherwise.

The scrutineers (i.e. Mr Krasa) would have been unable to determine at the meeting who was financial or otherwise. CMS was unable to determine until mid-January 2003 due to the poor state of financial records, who was financial and who was not financial. To this day it is still difficult to say with 100% accuracy at the annual general meeting.

I noted that the new committee accepted financial statements and reports at a committee meeting held on 29 January 2003. At that meeting, the body corporate manager tabled a list of outstanding debtors, and the committee resolved to pursue those debtors, and instructed the body corporate manager that discounts not be granted.

On 30 July 2003 a member of the Commissioner’s staff requested the body corporate manager to provide a list of the outstanding debtors as presented to the committee on 29 January 2003. The list revealed that 4 lots were shown as having outstanding levies, with only lot 3 recorded as having levies outstanding for 60 days. The other lots, 37, 41 and 54, had had their levies outstanding for fewer than 30 days. As the annual general meeting had been held on 27 November 2002, then it would appear that these lots were not unfinancial at the date of the annual general meeting. Lot 3 appeared to have been the only lot which was unfinancial. Lot 3, however, did not cast a vote at the meeting.

I am therefore satisfied that the votes counted at the annual general meeting appear to have been cast by owners who were eligible to vote, in that they were financial at the time of the meeting.

Unregistered company nominee votes

Once again the applicant did not identify which votes were allegedly cast by an unregistered company nominee "in favour of the committee motions".

I note from the roll that there are 5 corporate owners in this scheme, of which 4 cast votes for the annual general meeting. CMS stated in its submission:

There was no roll present at the meeting and the returning officer determined that the votes of the "so called unregistered company nominees" were valid. It would have been impossible to determine this from the records supplied by the secretary.

The 4 voting corporate owners cast varying votes. It is inaccurate to state that the votes were in favour of the committee motions, as the voting pattern was mixed. In any event, even if all of these votes were disregarded, none of the motions would have been decided differently. I am not satisfied that the meeting should be invalidated on the basis of these unfounded allegations.

Missing pages from votes which were then written up by the chairperson and counted

Once again the applicant has not identified which voting papers were allegedly involved. The allegation appears to me to be absurd. It is difficult to imagine a situation where a chairperson would be so foolish as to complete voting papers on behalf of other lot owners in front of scrutineers, and then instruct the scrutineers to include those voting papers in the tally.

Ms Janes explained that the owner of lot 47 had sent a voting paper to Queensland Strata Administration (QSA), the previous body corporate manager, but at the meeting it was discovered that there was a page missing. Ms Janes further explained that the owner of lot 47 was present at the meeting, and completed the missing page of the voting paper. The minutes confirm that Mr Roggero, a co-owner of lot 47, was present at the meeting and that a voting paper was lodged. I accept this explanation.

Proxies were not sighted until after the end of the meeting

Ms Janes stated in her submission that proxies were read to the meeting by Ms Marika Maselli of QSA prior to the meeting being declared open. Section 72(5) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) provides that the appointment of a proxy is effective only if a properly completed proxy form is given personally, by post or by facsimile, to the secretary before the start of the meeting at which the proxy is to be exercised.

It is immaterial if other persons present at the meeting, or the scrutineers, did not sight the proxies until after the meeting.

During my inspection of the body corporate records I noted the proxies which were acknowledged in the minutes. I also noted that the owner of lot 13 had given a proxy to Mr Krasa, but as the owner of lot 13 had also lodged a voting paper, then Mr Krasa did not exercise his proxy, in accordance with section 74(3)(b) of the Standard Module. The only minor defect that I found in any of the proxies was that the proxy appointing Mr Krasa did not stipulate his lot number, but I did not consider this to be of any consequence, and, as stated, Mr Krasa did not exercise his proxy in any event.

I am not satisfied that this allegation provides any basis for invalidating the meeting.

Many voting papers sent from the same fax numbers

The applicant claims that at least a dozen or more voting papers came from fax numbers which were later discovered to belong to two committee members. The applicant contends that if these votes were invalidated, along with the votes of unfinancial members and the unregistered company nominees, then the budgets would not have been accepted, and nor would the new contracts have been authorised.

CMS stated in its submission that a review of the body corporate records did not substantiate that at least a dozen voting papers had not come directly from owners. Ms Janes made a similar submission on behalf of the committee.

My inspection of all of the voting papers revealed that, of the 19 voting papers forwarded by facsimile, 3 voting papers were faxed from Baronnet and 3 were faxed from Rinaudo & Co, solicitors. The owners who faxed from Baronnet live in the scheme. One of the voting papers (which covered two lots owned by the same owner) faxed from Rinaudo & Co was also posted in. None of these owners has provided a submission suggesting that they did not exercise a free and informed vote.

I noted in particular that the vote exercised by the owner of lot 49 was faxed from Thyssenkrupp Materials Australia (facsimile Number 613 9546 2612), not from committee member Doyle’s facsimile number 5570 2313, as alleged by the applicant. In fact, I could not detect a single voting paper that was faxed from Mr Doyle’s fax machine. As for the claim that the "three stripes" were indicative of voting papers having been sent from Mr Doyle’s fax machine, I could find nothing to substantiate this allegation. Furthermore, the "three stripes" also appear on a proxy form, which was faxed from Rinaudo & Co, solicitors. Of the 19 voting papers forwarded by facsimile, and inspected by me, only one voting paper (for lot 20) did not have an identifier on it, either in the form of a facsimile number and/or the name of the transmitting machine.

Section 51(2) of the Standard Module provides that a written vote is cast by completing the voting papers as required by the accompanying instructions and giving them to the secretary (personally, by post or by facsimile) before the start of the meeting.

The meaning of the word "personally" has been the subject of judicial interpretation. In Body Corporate for Surfers Waters CTS 20377 –v- Angland (District Court Southport 10 March 2000) His Honour Judge Robin Q.C. found that the word "personally" referred to the voter, and not to the secretary. He therefore found that voting papers hand delivered to the secretary by a third party were invalid. His Honour expressed the view that this was a "consumer protection" provision which was designed to protect all lot owners, although he conceded that the use of the word "personally" in section 51(2) is clumsy and may lead to inconvenient or absurd consequences. However, His Honour concluded that, "at the least, what the provision requires is a personal commitment by the voter to his or its vote to the extent of personal and particular steps being taken in relation to that voting paper to get it to the secretary in a way that indicates to the secretary the voter’s personal, considered imprimatur and implies a warranty to the secretary that the vote is an enthusiastic, free and genuine one."

His Honour also referred to the personal delivery "creating an assurance that every written vote cast is a sincere and honest expression of the voter’s views, as authenticated by the voter’s taking the trouble personally to give the voting paper to the secretary if the alternative modes of transmission are not resorted to". (emphasis added)

The alternative modes of transmission of voting papers to which His Honour referred are specified in section 51(2) as being by post and by facsimile. If a voter uses either of these forms of transmission, it will be impossible to determine whether the voter has actually posted the envelope in which the voting paper is contained, or whether the voter has actually fed the voting paper into the facsimile machine. Not all owners will have a personal facsimile machine. Some may use a work machine, others may go to the post office, or to a local business which provides such a facility to the public for a fee. As I have already stated, there were 3 voting papers sent from Baronnet, and 3 sent from Rinaudo & Co, solicitors. The 3 owners whose voting papers were sent from Baronnet reside in the scheme, and I have assumed that it was convenient for them to transmit their voting papers in this way. I do not have any evidence about the 3 owners who sent their voting papers from Rinaudo & Co. They may well be clients of the firm. However, in the absence of a submission from any of those owners (and all owners were invited to respond to the application) that their vote was not "a sincere and honest expression" of their views, then I have no reason to find otherwise. I do not propose to invalidate any of these votes.

Yellow stickers marking anomalies were removed in front of scrutineers by chairperson

Once again the applicant has not identified the anomalies, nor has she identified the voting papers and/or proxies in which the anomalies allegedly occurred. I can make no finding on such a generalised allegation, without any supporting evidence.

Voting papers taken by chairperson at the end of the meeting

Ms Janes pointed out in the committee submission that at the end of the meeting the voting papers were given to the secretary, Mr Barry Doyle, who, in turn, delivered them, along with other papers, to CMS, the newly appointed body corporate manager.

At the time of my inspection, all voting papers and other meeting material were contained within the body corporate records, and were made available to me.

Non-owners allowed to speak on behalf of committee motions

Ms Janes stated that any non-owner at the meeting was present at the invitation of the committee to address the meeting. CMS stated that the chairperson controlled the meeting, and requested that several people, apparently associates of the then body corporate manager, refrain from interjecting during the meeting. CMS further stated that the chairperson called upon a previous letting agent to assist in clarifying to the meeting a point raised in discussion. I can envisage numerous occasions on which it might be beneficial for owners to have a non-owner address them in relation to a motion proposed for their consideration, such as if a large refurbishment were to be contemplated, and the tenderer made himself available to answer any questions that owners might have. Owners’ rights would not be affected; they would still be able to vote for or against a proposal as they saw fit and they would very possibly be better informed.

I do not consider this to be a basis upon which to invalidate the meeting.

Motion 10 Caretaking agreement

This motion involved a caretaking agreement, for which the body corporate is to pay $45,000 per annum for 3 years, with a further option of 3 years. The sum involved far exceeds the relevant limit for major spending ($13,000.00) for this scheme, and under section 104(3) of the Standard Module, the previous committee should have obtained two quotations, and presented both of the quotations, in the form of alternative motions, to the meeting for owners’ consideration (section 104(2)). Having failed to do so, the motion is void, and I have ordered accordingly.

Motion 3 Administration fund budget

There is no evidence before me that the budget has been artificially inflated in order to create a surplus, which is to be transferred to the sinking fund, as alleged. Furthermore, the budget was passed by the votes of owners, not by the chairperson, as stated by the applicant.

Motion 2 – Accounts

If the audit of the financial statements was not available at the meeting, and the body corporate had previously resolved that the accounts be audited, then the chairperson quite properly ruled this motion out of order. I also note that when the audit was completed, it found that several transactions in the profit and loss statement were unable to be sourced back to invoices, and that such transactions accounted for approximately 5% of total expenses.

Body Corporate Administration – Cambridge

CMS advised that the charges to which the applicant referred are contained in clause 3.2 of the administration agreement, and only relate to additional services, if requested by the body corporate. The hourly rate refers to those services. CMS pointed out that the agreement tabled at the meeting was approved by owners.

Motion 9 – Licensing and Letting Agreement

The applicant claimed that the then secretary asserted that she was not present at any committee meeting when this agreement was discussed. However, the minutes of the committee meeting held on 25 September 2002 record that the then secretary was present, and that one of the motions for consideration at the forthcoming annual general meeting was the appointment of Kay Teagle as letting manager for 1 year with a 3 year option. It appears that the then secretary was mistaken in her assertion.

The applicant also complains that the letting agent was not required to pay the body corporate for the engagement. Section 113 of the Act provides as follows:

(2) Subsection (1)(b) does not apply to the first authorisation given after

the benefit, as a debt. (emphasis added)

The applicant may be confusing the situation where an agreement is transferred within 3 years after the date on which the engagement or authorisation was entered into, and section 85 of the Standard Module applies. In the present situation, the letting agent was entering into a new agreement, therefore this was inapplicable.

New committee

The applicant stated:

"Up to this time, none of us knew what was going on and we trusted our committee. We now realise that we were not informed or asked about important matters and the complex for the first time in 6 years has problems again. We now need a committee who will work for owners and not send us bankrupt."

Owners had their opportunity to nominate for committee membership before the annual general meeting, and they will have a further opportunity to nominate for positions when invited to do so before this year’s annual general meeting. There is no evidence that the present committee is not adequately discharging its duties.

I find the applicant’s position in this application somewhat curious, when compared with her concerns expressed in a letter dated 4 August 2003 to this office, in which she complained of the extraordinary general meeting scheduled to take place on 20 August 2003. In this letter the applicant expressed the view that the main reason for the extraordinary general meeting was to reappoint CMS for three years, which she regarded as not being urgent, since the CMS contract runs to December 2003, when the next annual general meeting is due. That of course is a matter for owners, and if they have a similar view, they will undoubtedly vote against the motion.

However, the applicant also complained that most of the motions proposed for owners’ consideration could have been decided by the committee. Whilst it is correct that motions 3, 4, 6, 7, 8, 9 and 10 involve spending that is within the limit for committee spending, I find it ironical that the applicant should be complaining that such matters are put up for owners’ consideration, when in the application she complained that "owners were not informed or asked about important matters". The committee is not precluded from seeking owners’ input simply because a matter is within the committee’s spending limit.

Appointment of an administrator

The applicant has provided no evidence that an administrator should be appointed to this scheme. Adjudicators will only take such a step where the day-to-day operations of a body corporate have fallen into such disarray that the body corporate cannot continue to function. It appears that this scheme is operating satisfactorily. A newsletter from the chairperson sent to all owners in March 2003 noted that:

I also note that the committee has had regular meetings, the minutes of which have been provided to this office, as requested.

In response to this newsletter, 28 owners signed a request addressed to the Commissioner that the application to invalidate the annual general meeting and to appoint an administrator be rejected.

Having considered all of the evidence, I have decided to dismiss the application. I have also ordered that motion 10 purportedly passed at the annual general meeting was at all times void because of the contravention of section 104 of the Standard Module.

I wish to make one final comment in relation to this application. In a telephone conversation with a member of the Commissioner’s staff on 14 August 2003 the applicant expressed concern that I had already made my decision in this application, and that I had conveyed my decision to other parties, without conveying it to the applicant. The applicant’s concern is totally unfounded. I have made my decision in this application today, after considering all of the material available to me. The decision will be conveyed by the administrative staff to all parties at the same time in accordance with the usual practices of this office. Adjudicator’s decisions are not conveyed to any party over the telephone. The decisions are either posted or faxed, depending on whether a party has a facsimile number.

Unless advised to the contrary, there was no legal impediment to the committee proceeding to undertake all usual committee duties, including the calling of an extraordinary general meeting. In a letter dated 29 July 2003, written by CMS in response to a request from this office for minutes of meetings, the body corporate manager explained that a meeting, which the committee had originally intended to call in April 2003, had not been called at that time because of this dispute and the tasks associated with providing information regarding the dispute. The body corporate manager further explained that "as time went by and it became evident the dispute would take longer to resolve the committee decided to act and address a number of issues detailed in a Workplace Health and Safety audit undertaken early this year."

Number of Scheme:	9557
Name of Scheme:	Baronnet
Address of Scheme:	Enderley Avenue Surfers Paradise QLD 4217

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Baronnet [2003] QBCCMCmr 73 (19 August 2003)