The Dees [2004] QBCCMCmr 13 (8 January 2004)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Michael Lockhart & Dorothy Lloyd, the co-owners of lot 1

I hereby order that the application for an order to postpone the extraordinary general meeting of 10 January 2004 until dispute resolution application 0635-2003 has been finally determined, is dismissed.

I further order that motion 2 ‘Election of Chairperson’ on the agenda of the general meeting of 10 January 2004 is void and of no effect, and that any votes cast on this motion shall be disregarded.

I further order that at the general meeting of 10 January 2004 the person chairing the meeting shall:

(1) Invite nominations for the vacant position of chairperson at the meeting; and
(2) Accept eligible nominations made by lot owners who do not owe a body corporate debt at the time of the meeting, and that have been:

(a) made orally from the floor at the meeting; or

(b) made in writing and given by hand by post or by facsimile before the election is conducted to the body corporate secretary; and
(3) Conduct the election for the vacant position of chairperson in compliance with the provisions of section 25E of the Body Corporate and Community Management (Standard Module) Regulation 1997, except as provided for in this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0820-2003

"The Dees" CTS 14477

APPLICATION

This application was made by Michael Lockhart and Dorothy Lloyd, the co-owners of lot 1 (applicants) on 22 December 2003 under the Body Corporate and Community Management Act 1997 (Act). The applicant has sought an interim order against the Body Corporate for The Dees Mooloolaba (respondent) as follows:

"We seek an interim order to have the body corporate meeting for 10 January 2004 which has been organised by the Secretary & AUA postponed until the Commission has ruled on our Application 0635-2003, as the proposed Agenda for that meeting seeks to discuss & make decisions on three matters which are the subject for determination that have not yet been made the by Commission."

The applicants seek final orders that:

"On 19.9.03 we sent to the Commission Application 0635-2003 seeking four orders as follows:

(a) We request an order that the above body corporate cease the unauthorised use of Australian Unit Administration (AUA) as managers of "The Dees" body corporate, withhold payment to them and have refunded any fees paid to AUA since 30.06.03, as they were not appointed via a resolution via a general meeting and in other ways have shown disregard for the requirements of the BCCM Act. We request that the body corporate ensure that AUA remove from records the arrears charged against our Lot without authority. We request that a meeting of the body corporate be hold, and an independent returning officer such as Colin Lamont from the Gold Coast Unit Owners' Association be appointed to prepare the documents & convene the meeting. (He has agreed to do this - letter enclosed). We request that the body corporate be required to request that AUA return all books & records, and provide a reconciliation of all fees paid to AUA since 30.6.03 and moneys spent since then, and hand the books to the meeting convenor.

We request that this first order be handled expeditiously, as the body corporate's using AUA as manager will create more problems the longer it continues.

(b) We request an Order that pursuant to Sect. 106 of the BCCM Act, Standard Module, the body corporate have its statement of accounts for at least the past two years audited as soon as possible.

(c) We request an overturning of the defeat of Motion 13 at the AGM on 30.6.03 to have engineers Cardno MBK supervise the approved repairs to be carried out by Building Rectification Services Pty Ltd to the cracks on the lower outer edge of Lot 1 balcony. It was defeated 4-1 (Item 2, Minutes in original Application).

(d) We request an overturning of the defeat of the motion at AGM on 30.6.03 to have the body corporate install drains to prevent the flooding of garages. The motion was defeated 4-1. We request that otherwise the body corporate follow the recommendations in the Farr Evrat Engineers report. (Item 2, Minutes and Item 15, Farr Evrat Engineers report, in original Application.)"

The Dees community titles scheme (The Dees) consists of five lots and common property. The community management statement for The Dees indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme.

PROCEDURAL MATTERS

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order being issued. An interim order may be considered notwithstanding that all affected persons have not been given notice of the application, or afforded an opportunity to make submissions about the application (section 247(3)).

On 23 December 2003, a copy of the application was provided to all owners and the body corporate manager, with an invitation to respond to the matters raised in the interim order application (section 243 of the Act). In view of the timeframe of the application and the limited submissions period only was provided, in the first instance. Written submissions have been made on behalf of four owners.

JURISDICTION

This is a matter which falls within the dispute resolution provisions of the legislation (see sections 227, 228, 276 and Schedule 5 of 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:

(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.

Section 279(1) allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances. 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)).

MATTERS IN DISPUTE

This application relates to dispute resolution application reference 0635-2003, which was lodged on 19 September 2003 by the applicants. That earlier application seeks the same final orders as outlined in the final orders of this application. Further submissions are currently being sought from affected parties on that earlier application (along with a third application lodged by the applicants – reference 0454-2003) in relation to additional information provided by the applicants.

The applicants assert that on 18 December 2003 they received a notice of an extraordinary general meeting (EGM), scheduled for 10 January 2004. I have been provided with a copy of this notice, dated 8 December 2003. The motions on the agenda include confirmation of the annual general meeting (AGM) minutes, election of a chairperson, consideration of the need for a body corporate manager and the proposed body corporate management agreement, and reconsideration of motions from the AGM regarding the supervision of repairs and drainage repairs.

The applicants suggest that most of these agenda items are issues that are the subject of application 0635-2003. The applicants therefore argue that the meeting is purporting to "...circumvent the authority of the Commission...". They argue that the respondent body corporate and the purported body corporate manager (Australian Unit Administration) did not take the opportunity to consider these matters properly at the last AGM on 30 June 2003, and that it is unlikely to now give fair consideration to these matters at the proposed EGM. Accordingly, they are seeking to postpone the EGM until a final order is made in respect of application 0635-2003.

In response, the submissions received argue that the motives imputed by the applicants regarding the purpose of the meeting are incorrect. The submissions suggest that the general meeting was called with the aim of seeking a prompt resolution of the issues currently in dispute.

The applicants also appear to dispute the nomination of Ken Lonie as chairperson. They argue that Mr Lonie, who is the representative of the owner of lot 4 (now Mrs Margery Voigt, following the death of former co-owner and chairperson, Mr Jim Voigt), is not eligible to be appointed. Mr Lonie’s submission, on behalf of lot 4, argues that he is the nominated representative of the owner of lot 4 and therefore assumes all the rights and powers of the owner. He refers to section 49(2) of the Standard Module in claiming that a power of attorney is not required to act for lot 4.

DETERMINATION

In the first instance I am concerned with the application for an interim order. In any consideration of an application that seeks the making of an interim order, it is necessary to determine whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.

Section 279 of the Act provides for interim orders. The examples included in the Act under section 279(1) indicate the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. In other words, the legislation contemplates that the main function of an interim order is to put an event or action (for example, a resolution of a meeting or a proposed improvement) "on hold" until the application is finally determined. Interim orders are not designed as a mechanism to finally determine the substantive dispute between parties. Whilst the range of matters that might be the subject of an interim order is not capable of definition, an 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.

Adjudicators are generally loathe to prevent general meetings from proceeding as scheduled, particularly when an order to that effect would be made in such close proximity to the time of the scheduled meeting that owners may be personally inconvenienced and financially disadvantaged. While it is not evident that any owner lives a significant distance from the meeting location, some certainly do not live at the scheme and it is feasible that travel costs would be wasted if those owners had made arrangements to be present at the meeting and it was cancelled at the last minute.

I am not satisfied that there is any particular circumstance warranting this meeting being prevented from proceeding. However, in some cases it may be appropriate to preserve the status quo until the matter can be fully investigated, by requiring that the body corporate shall not implement or otherwise act upon motions passed at a disputed meeting until the application is finally determined. I will consider whether this course of action is appropriate in this instance.

Issues awaiting determination

There is no requirement in the Act or Standard Module that prevents a body corporate from conducting meetings or any other business while a current dispute resolution application is lodged with the Office of the Commissioner for Body Corporate and Community Management, except to the extent that this is in contravention with a specific order of an adjudicator. Similarly, there is nothing to prevent a body corporate from considering matters that are currently before this Office.

The purpose of the dispute resolution process is to consider disputes that can’t be resolved independently by parties. Ideally parties will resolve disputes before an application is necessary, but of course that is not always possible. However, the fact that an application has been lodged does not prevent parties continuing to pursue avenues to independently resolve issues in dispute. The existence of an application does not exclude consideration of the issues by the body corporate.

Accordingly, it is not inappropriate in the circumstances for the body corporate members to consider motions at the EGM that are the subject of application 0635-2003. It is possible, albeit unlikely, that the resolutions on these motions could resolve some of the issues in application 0635-2003 to the satisfaction of all parties. However, even if this doesn’t occur, the views of the owners as expressed in the resolutions will be of guidance to the adjudicator ultimately determining application 0635-2003. If the determination in 0635-2003 is in conflict with a decision of the body corporate at the EGM, the adjudicator’s order will of course prevail.

The applicants’ argument appears to suggest that the issues regarding the appointment of a body corporate manager and the motions relating to repairs were not given "proper consideration" at the AGM. If this is the case, then I do not see how the opportunity for the body corporate to now consider these issues ‘properly’ is inappropriate.

While the applicants argue that the respondent body corporate will not give fair consideration to these motions, they have not given specific reasons other than to refer generally to the lengthy documentation provided in application 0635-2003. I do not consider that it is necessary for me to review that documentation here. I am concerned that by referencing the entire application 0635-2003, the applicants may be endeavouring to obtain some type of preliminary assessment of the outcomes sought in that earlier application. I do not consider that this would be appropriate.

If the applicants are asserting that the body corporate will not act reasonably (see section 94(2)) in considering these motions, it is arguable that this could only be assessed once the meeting has occurred. That is, it is only after the motions have been voted on that it would be possible to present an argument that the resolutions, whatever they may be, are unreasonable and why.

Importantly, with the exception of the nomination of the chairperson, the applicants have given no reasons why the specific motions proposed are invalid or unreasonable. Nor have they outlined any adverse impact to themselves or the scheme from the passing of any of the motions (other than that it would precede a decision on application 0635-2003) that would occur in the time before the earlier application is resolved. The main concern of the applicants appears to be that the exercise is "pointless". I do not consider that this is a sufficient basis to interfere in a meeting which, on the basis of the material presented by the applicant, appears to have been validly called.

I have given particular consideration to whether any resolution on motion 4, regarding the signing of body corporate management agreement, should be put on hold until application 0635-2003 is finally determined. That type of motion, where a body corporate is entering into a binding contract for services, is certainly of a nature that adjudicators often require bodies corporate not to act on until a dispute is resolved.
There certainly may be issues here that warrant owners giving careful consideration of the appropriateness of passing this motion. However, in their application the applicants have not sought to defer these motions because of some question regarding the legislative validity of the motions or the meeting procedure. Accordingly, I do not consider that the applicants have presented any reasonable basis for me to put any resolutions passed at the EGM on hold until application 0635-2003 is finally determined. However, a different issue arises in regard to motion 2, which is outlined below.

Nomination for Chairperson

Motion 2 proposes the election of Mr Ken Lonie as chairperson, and his eligibility is disputed. Section 10 of the Standard Module outlines the eligibility for committee membership. Section 10(1)(b)(i) provides two situations where a person who is not an owner can be nominated for membership of the committee, if they are nominated by a member of the body corporate (the nominating entity) who is an individual. The nominee must either be a member of the family of the nominating individual or the nominee must hold the power of attorney of the nominating individual.

Section 10(5) defines who is considered a family member:

"family", of a nominating entity who is an individual, means the following persons--

(b) each of the children of the individual or the individual’s spouse who is 18 years or more, including a step child or an adopted child;

(d) a brother or sister of the individual.

As a son-in-law does not fall within this definition, it would appear that Mr Lonie could only be eligible for nomination as a committee member if he held the power of attorney for an owner. At the time that Mr Lonie was nominated by Mr and Mrs Voigt (November 2003), he was eligible for nomination. Until 1 December 2003, section 10 of the Standard Module provided that any non-owner nominated by an owner was eligible if they were not a body corporate manager, service contractor, letting agent or associate of the same. However amendments to the Standard Module that were approved in October 2003 and have effect from 1 December 2003 amended this provision as outlined above. Notwithstanding that the nomination was made prior to this date, the meeting was called after 1 December 2003 and so the provisions in force as of that date apply.

It appears from Mr Lonie’s submission that he misunderstands his position as the representative of lot 4. Regardless of the wording of the letter authorising him as Mrs Voigt’s representative, it does not, as he suggests, give him "all rights and powers which Margery Voigt has under the BCCM Act and Regulations, or otherwise as owner". He has authority only as specifically provided for in the relevant legislative provisions. While he relies on section 49(2), this section refers only to voting at a general meeting, and does not extend to other rights and responsibilities of owners. However, I am satisfied that Mr Lonie has the authority of the owner of lot 4 to make a submission on behalf of lot 4 in regard to this application. It will of course be for the adjudicator considering application 0635-2003 to determine the acceptability of Mr Lonie’s submission in regard to that application.

With the recent amendments, division 5A of the Standard Module now provides two options for the filling of a casual vacancy. Under section 25C, within one month of the vacancy arising the committee can simply appoint an eligible person to fill the vacancy, providing that the number of committee members has not fallen below the quorum (three). Alternatively, or if less than three committee members remain, a general meeting must be called to fill the vacancy.

Section 25D sets out the requirements for an explanatory note that must accompany the notice of meeting called to fill a casual vacancy on the committee, section 25E outlines the election process, and section 25F requires that a motion be included on the agenda, for consideration in the event that the position of chairperson is not filled and the total number of voting members on the committee is less than three, regarding whether to approve the engagement of a person as a body corporate manager under Division 10 of the Standard Module. It is clear that the notice of meeting for the disputed EGM did not comply with the requirements of section 25D or section 25F. Therefore even if Mr Lonie was an eligible nominee, the motion was not valid.

I acknowledge that owners are concerned about the urgency of appointing a replacement chairman and do not consider that it is in the interests of owners to require a further meeting to be called to elect a chairman, particularly given that section 25E allows for nominations to be called from the floor and voting to be by those persons present at the meeting. Accordingly, I propose to allow an election for the vacant position of chair to be conducted at the meeting on 10 January 2004, following the processes outlined in section 25E as near as is possible in the circumstances.

Conclusion

As indicated, I am not satisfied that it would be reasonable in the circumstances to prevent the proposed EGM of 10 January 2004 from proceeding. Moreover, I am do not consider that the applicants have presented any reasonable basis to warrant any resolutions passed at the meeting from being acted on prior to the determination application 0635-2003.

Of course, if any owner believes the body corporate has not acted reasonably in respect of any resolution made at the EGM, they can lodge a dispute resolution application (having consideration to the time limits in section 242 of the Act) seeking to overturn those resolutions and detailing the basis for the claim. If necessary, an interim order could be sought to place a resolution on hold pending a determination of the validity of the resolution. Any application would need to present cogent argument as to why such an order would be warranted.

However, I consider that motion 2 regarding the appointment of the chairperson is not a valid motion because Mr Lonie is not eligible to be nominated to the committee and because the meeting notice did not comply with the requirements of Division 5A of the Standard Module. Notwithstanding deficiencies in the notice, I have made an order allowing for the election for the vacant position of chair to be conducted at the EGM, following the processes outlined in section 25E to the extent that that is possible in the circumstances.

While the applicants have included final orders in their application, these repeat the orders sought in application 0635-2003 and the applicants present no additional argument on those matters. The application simply refers to the material on the earlier application. While those final orders are stated, it is clear that the purpose of this application is solely to determine the question posed by the interim order, which I have done. In the circumstances, I do not consider it necessary or appropriate to determine the issues raised in the final orders. This would necessitate a duplication of the submissions and investigation processes of the earlier application, and I am satisfied that this was not the intention of the applicants. The issues raised in the final orders will be investigated when application 0635-2003 is determined.

In the circumstances it is not intended to invite further submissions regarding this matter, or to make a further order on this application. This decision, though an interim one as sought by the applicant, is final in its determination of this matter (noting that the orders sought in application 0635-2003 will be determined in due course). If the applicants consider that an appeal of this decision is warranted, then they should appeal the interim order.

Number of Scheme:	14477
Name of Scheme:	The Dees
Address of Scheme:	12 Murlong Crescent PALM BEACH QLD 4221

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

The Dees [2004] QBCCMCmr 13 (8 January 2004)