Raintree Gardens [2004] QBCCMCmr 208 (21 April 2004)

Last Updated: 17 May 2005

REFERENCE: 0235-2004

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	1150
Name of Scheme:	Raintree Gardens
Address of Scheme:	108 Mayers Street MANUNDA QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Sandra Mary Murphy, the owner of lot 25

I hereby order that the resolution purportedly carried by the body corporate at the EGM held on 8 April 2003 headed Pest Control of Building is invalid and of no effect, and shall not be implemented or otherwise acted upon.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0235-2004

"Raintree Gardens" CTS 1150

The applicant, Sandra Mary Murphy, the owner of lot 25, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote –

To prevent work commencing on this complex by Pestaway Pest Control Company on Friday 23^rd April as voted on at recent EGM until it has been determined all aspects of EGM was legal and body corporate quidelines were complied. ...

The applicant has also requested the following interim order, quote -

Preventing work to be done on 23/4/04 by Pestaway Pest Control.

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

(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)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The scheme is a subdivision of 28 lots registered under a building unit plan (now a building format plan). The regulation module applying to the scheme is the Standard module.

In her grounds, the applicant states that –

It is my understanding that 2 written quotes should be presented at an EGM before a vote is taken, especially work quoted at $11,648 exceeding $7000 ceiling of a 28 unit complex.

The applicant provided a copy of the minutes of the EGM held on 8 April 2004, and also the minutes of AGM held on 27 February 2004, but not the notice of each meeting. The notice of the EGM held on 8 April 2004 was provided by the secretary.

The notice (and voting paper) provides that the motion headed "Pest control of Building" was proposed by the committee. It proposed that the quote from Pestaway Pest Management (PPM) "for a total of $11,682 to treat Units 1 to 14 and 22 to 28 as per quotes provided, be accepted". It further proposed a special levy to fund the expenditure. No second or alternative motion is provided as per the voting paper. The minutes of meeting record that the motion was carried by 14 in favour with one against and one abstention.

In the Explanatory Schedule accompanying the voting paper, the following explanation is provided –

At the AGM on 27/2/04 we considered quotes from 2 separate contractors to do a barrier around one of the buildings only. Between when the meeting was called and when it was held, termites where found in the other buildings. We have therefore requested the successful contractor for the first building to quote to do the other three buildings. We have NOT provided a second quote based on the fact that the quote for each building is the same as the original building, and we want the same contractor to do them all. We felt that we decided the same contractor at the AGM and are just authorising the additional expenditure at this one. Refer to minutes of AGM 27/2/04 and Managers Report.

Section 104 of the Standard Module provides –

104 Quotes for major spending
(1) This section applies if--
(a) a motion to be moved at a general meeting of the body corporate proposes the carrying out of work or the acquisition of personal property or services, including the engagement of a body
corporate manager or service contractor, but not including the engagement of a service contractor who also is, or is to be, a letting agent; and
(b) the cost of carrying the proposal into effect is more than the relevant limit for major spending for the scheme.
(2) The lot owners must be given copies of at least 2 quotations for carrying out the work or supplying the personal property or services.
(3) If the motion is proposed by the committee, the committee must obtain the quotations.
(4) If the motion is not proposed by the committee, the person proposing the motion must obtain the quotations and give them to the secretary.
(5) Copies of the quotations or, if voluminous, summaries of the quotations and advice about where the complete documents may be inspected, must accompany the notice of the meeting at which the motion is to be considered.
(6) If, for exceptional reasons, it is not practicable to obtain 2 quotations, a single quotation must be obtained and must accompany the notice of meeting.
Example--
If goods to be acquired by the body corporate are obtainable from only 1 source, a quotation for supplying the goods must be obtained from the source and circulated with the notice of meeting. The fact that goods with the necessary characteristics are only obtainable from a single source would be an exceptional reason for not obtaining 2 quotations for the supply of the goods.
(7) Unless subsection (6) applies, the motion must be stated as a motion with alternatives in the agenda and on a voting paper for the meeting.
(8) Each quotation obtained under this section must be retained as an attachment to the minutes of the meeting at which the quotation is considered.
(9) For this section--
(a) the cost of engaging a body corporate manager or a service contractor includes any payment for the body corporate manager’s or the service contractor’s services, provided for under the engagement, for the term of any right or option of extension or renewal of the engagement; and
(b) if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for major spending for the scheme if the cost of the project,
as a whole, is more than the relevant limit.

Section 104 is clear in its requirements. The limit for major spending is $250 per lot multiplied by the number of lots in the scheme ($7000 in the case of this scheme). The proposal by PPM exceeds the limit for major spending, and requires that the committee obtain at least 2 competing tenders or quotes for the proposal. In particular, the notice of meeting and voting paper fails to comply with section 104(7) which provides –

(7) Unless subsection (6) applies, the motion must be stated as a motion with alternatives in the agenda and on a voting paper for the meeting.

The requirements for a motion with alternatives are set out in section 42B of the Standard module. The secretary in compiling the notice of meeting and voting paper has clearly failed to comply with the requirements of this section, and consequently resolution 2 carried at the EGM on Thursday 8 April, 2003 is invalid and of no effect.

I have noted the body corporate explanation for proposing only the one motion at the EGM on 8 April 2004. With respect, this approach not only fails to comply with the requirements of the legislation as I have already pointed out, but is short sighted in my view. Since a further meeting was being held to consider the additional expenditure, what then was the difficultly in the body corporate considering competing quotes a fresh. Instead, the committee took the easy option, and only approached the previously successful tenderer. In the circumstances, there is no way of knowing whether other companies might have provided different quotes based on the additional work to be undertaken. I am not satisfied with the explanation provided by the committee for the failure to comply with relevant requirements.

In the circumstances, I did not seek a submission from the committee in response to the application prior to the making of this interim order for two reasons –

• I conclude that it is clear on the evidence available to me that there has been a failure to comply with clear statutory requirements, which cannot be overlooked. Section 104 is an important section included in the legislation for reasons of the protection of owners. Compliance with it is mandatory, and body corporate managers, as professional paid advisers to bodies corporate should be well aware of its requirements.
• Secondly, information indicates that PPM is to commence work at the complex this Friday, the 23 April 2004. Given this, it was imperative that this order be made so as to prevent the commencement of such work and thereby to allow the matter of pest control and management to be reconsidered by the body corporate at a further general meeting, in full compliance with the relevant provisions.

The body corporate cannot proceed to implement the existing resolution. It is invalid and of no effect. In the circumstances, there is no point in my view in further considering the dispute the subject of this application given the requirement for the body corporate to reconsider the matter in general meeting. If the applicant is subsequently concerned with other issues such as the right of a body corporate to access a lot and so forth following such reconsideration, then she will need to make further application at this time. This order, though interim as requested, is intended to be final in its determination of this dispute.