Kings Row South [2004] QBCCMCmr 239 (10 May 2004)

Number of Scheme:	11397
Name of Scheme:	Kings Row South
Address of Scheme:	18 Commodore Drive PARADISE WATERS QLD 4217

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

Keith Smith (a Co-owner of Lot 61), Peter Macaulay (a Co-owner of Lot 11), Philip King (a Co-owner of Lot 39), Anthony Djurovitch (a Co-owner of Lot 9), James O’Connor (the Owner of Lot 19), and David Peel (the Owner of Lot 8):

I hereby dismiss the application for various orders concerning the annual general meeting of the "Kings Row South" Body Corporate held on 31 March 2003.

I further order that the application for an order appointing and authorising an administrator to call and chair an annual general meeting of the "Kings Row South" Body Corporate is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0434-2003

"Kings Row South" CTS 11397

On 27 June 2003, the Applicants filed a dispute resolution application with the Commissioner for Body Corporate and Community Management ("the Commissioner") under the Body Corporate and Community Management Act 1997 ("the Act"). The Applicants are the Owners of Lots 8 and 19, and Co-owners of Lots 9, 11, 39 and 61.

In the application, the Applicants state that they are seeking the following outcomes:

Department of Natural Resources, Mines and Energy records show that the "Kings Row South" community titles scheme was originally created under a building units plan of subdivision (now known as a building format plan) registered on 30 July 1980. The scheme currently consists of 65 lots and common property.

A new community management statement was recorded for "Kings Row South" on 23 May 2003. The community management statement shows that the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module") applies to the scheme.

Section 227 of the Act restricts the types of "disputes" that may be resolved under the Act’s dispute resolution provisions to those between particular persons involved in a community titles scheme. This application describes a dispute between a number of lot owners and a body corporate, and falls into the category of dispute described in section 227(1)(b).

Section 276(1) of the Act allows adjudicators to make just and equitable orders to resolve disputes within community titles schemes, about-

(a) claimed or anticipated contraventions of the Act or a scheme’s community management statement; and

(b) the exercise of rights or powers, or the performance of duties, under the Act or a scheme’s community management statement; and

(c) claimed or anticipated contractual matters about the engagement of a person as a body corporate manager or service contractor for a scheme, or the authorisation of a person as a letting agent for a scheme.

Schedule 5 of the Act sets out a number of examples of potential orders adjudicators may issue to resolve disputes in community titles schemes. For instance, adjudicators may make orders declaring general meetings of bodies corporate, or resolutions purportedly made at a general meetings, void for irregularity (paragraphs 7 and 8). An adjudicator may also appoint and authorise administrators to perform certain obligations of bodies corporate, committees or committee members (paragraph 23).

In this case, the Applicants have sought an order declaring an annual general meeting of the "Kings Row South" Body Corporate (and resolutions of that meeting) void, as well as an order appointing an administrator for the purpose of convening a further general meeting. The Applicants are seeking these orders on the basis of purported breaches of the Act and Standard Module. As a result, it appears that the application is within the jurisdiction of an adjudicator.

In the supporting grounds to the application, the Applicants raise a range of other issues affecting the "Kings Row South" Body Corporate. For reasons outlined below, I do not intend to make any determination of these issues in the context of this application. Rather, I intend to determine the application for orders in the terms originally sought by the Applicants.

Before turning to the substantive issues of this dispute, I wish to outline the administration of the application to date. I have set out this summary for completeness, but more importantly, because it is relevant to the extent to which I have considered the various matters described in the application and the somewhat voluminous supporting material submitted by the Applicants.

As stated above, this application was submitted on 27 June 2003. Originally, the Applicants sought the four orders set out in the first part of this statement of reasons as interim orders. The final outcome sought by the Applicants was essentially a repetition of one of the interim orders, that being a declaration that the annual general meeting of 31 March 2003 was at all times void.

In a letter to the Applicants dated 1 July 2003, the Commissioner expressed a view that the nature and urgency of the circumstances of the application (as presented by the Applicants) did not warrant the matter being referred to an adjudicator for consideration for an interim order. The Commissioner went on to invite the Applicants to consider amending the application to either seek alternative and more suitable interim orders, or to seek the interim orders requested in the application as final orders.

In the same letter, the Commissioner requested the Applicants to provide further information and material regarding the application. Specifically, the Commissioner requested a copy of the minutes of the annual general meeting of the Body Corporate held on 31 March 2003, and the full notice of that meeting. Given that the Applicants were seeking the appointment of an administrator, the Commissioner also requested the Applicants to nominate a potential administrator, and to provide that person’s contact details and written consent to the proposed appointment.

The Applicants responded to the Commissioner’s letter of 1 July 2003 by way of letter dated 11 July 2003. In their letter, the Applicants sought to amend their application "by removing our request for Interim Orders and submitting a request for Final Orders only." The Commissioner approved the Applicants’ request, and the application was amended accordingly. The Applicants’ letter was accompanied by the meeting material and the details of the proposed administrator as requested by the Commissioner. This letter and the attachments have been included as part of the supporting grounds to the application.

In addition to the information and material requested by the Commissioner, at the conclusion of their letter of 11 July 2003, the Applicants go on to make the following comments:

The Applicants go on, albeit briefly, to raise concerns about a number of matters including fees paid to the Body Corporate Manager, the fire hydrant, and the state of repair of the marina. The Applicant’s also request an audit of the Body Corporate’s financial statements.

Additionally, the Applicants highlight a concern they have about a number of voting papers for the annual general meeting of 31 March 2003. This issue was very vaguely raised on page 4 of the Applicants’ original grounds, and is mentioned in a letter by one of the Applicants to the Body Corporate Chairperson dated 9 June 2003, which was included as an attachment to the original application.

In their concluding paragraph of the 11 July 2003 letter to the Commissioner, the Applicants state that "(w)e do not intend to inundate you with information relating to the above five matters, however, should you require further information, we have it, and we would be pleased to provide it for examination."

On 25 July 2003, and in accordance with section 243(1) of the Act, the Commissioner provided both the Body Corporate (care of the Body Corporate Secretary), and the Body Corporate Manager with a copy of the dispute resolution application, as well as a Notice of application and invitation to make a submission ("the notice inviting submissions"). The Commissioner also advised the Body Corporate Secretary of the Body Corporate’s statutory obligation to distribute copies of the dispute resolution application and the notice inviting submissions to each owner of a lot included in the scheme. In the interests of minimising costs for the Body Corporate, the Commissioner advised the Secretary that distribution of the application could be limited to the first 13 pages of the documents, on the proviso that owners were advised of their entitlement to obtain copies of the full attachments to the application from the Secretary.

Following distribution of the application to owners, in a facsimile dated 29 July 2003, the Applicants sought to provide the Commissioner with further details of their claim of irregularities in the completion of voting papers for the 31 March 2003 annual general meeting.

In a further facsimile dated 31 July 2003, the Applicants lodged their "strongest objection" to the Commissioner inviting owners to make submissions about the application. I understand that the Commissioner addressed this, and a number of other issues in a letter to the Applicants dated 14 August 2003.

I have before me written submissions from the Body Corporate Committee, the Body Corporate Manager, the Caretaking Service Contractors, and Owners of Lots 41, 43, 45, 49, 51, and 56. I also have before me a petition style submission signed by a number of lot owners. Each of the submissions opposes the application.

One of the Committee members (the Owner of Lot 37) has made a further submission (dated 15 August 2003). In this submission, the Owner of Lot 37 alleges that one of the Applicants has presented the Commissioner with false and misleading information, in breach of section 297 of the Act. Specifically, the Owner of Lot 37 claims that the Applicants’ further information contained in the letter of 11 July 2003 contains false and misleading information about the fire hydrant, the marina and the financial affairs of the Body Corporate.

In accordance with section 246 of the Act, the Applicants obtained copies of the submissions made about the application. Two of the Applicants have provided written responses to the submissions, which include responses to the allegations of the Owner of Lot 37 regarding false and misleading information.

I have been also been presented with further material from the Owner of Lot 37 (an email of 29 August 2003). This material appears to be a response to one of the Applicants’ replies to submissions. I have not had regard to this document for two main reasons. Firstly, there is no provision in the legislation allowing owners to make a written response to an Applicant’s reply to submissions. Secondly, and perhaps more importantly, after considering and determining the parameters of this application, I have come to the view that the email does not contain information that I need to consider in determining this dispute.

On 24 October 2003, the Commissioner made a dispute resolution recommendation that the application should be resolved by departmental adjudication. The Commissioner has referred the application to me for determination.

I note that in a letter dated 14 November 2003, the Applicants endeavour to provide the Commissioner with further information about the marina, presumably intended to be considered by an adjudicator in determining the application.

In my opinion, the Applicants have endeavoured to substantially broaden the parameters of this dispute throughout the administration of this application. After reviewing all of the material, I have decided to limit my consideration of the application to the issues that were substantially raised by the Applicants in the original application, those matters being:

I do not intend to explore the issues raised in the Applicants’ letter of 11 July 2003 (or later correspondence) that were not substantially identified in the original application. For example, I do not intend to address concerns relating to the remuneration of the Body Corporate Manager, the claimed irregularities in voting papers for the annual general meeting, the fire hydrant or the marina. Further, I do not intend to consider the Applicant’s request for an audit of the Body Corporate’s financial "affairs" (I will refer to these five issues as "the secondary matters").

I have a number of reasons for limiting my consideration of the material presented in this application, which I will outline below. However my overriding concern is that it would be procedurally unfair to both the Body Corporate and other individual lot owners for me to allow the Applicants to so substantially and gradually expand the scope of this application from what was originally presented to the Commissioner.

Firstly, I am not satisfied that the Applicants have clearly and definitively articulated the orders that they are seeking regarding the secondary matters. In accordance with section 239(2)(a) of the Act, a dispute resolution application must include a statement of the outcome being sought by the application. Originally, the Applicants sought no outcome in relation to the secondary matters. Further, and notwithstanding that the Applicants sought the Commissioner’s approval to formally amend the application regarding interim orders, the Applicants did not subsequently seek the Commissioner’s approval for a formal amendment of the application to include a request for orders about the secondary matters. Rather, the Applicants simply make a suggestion in their letter of 11 July 2003 that "perhaps consideration could be given to temporarily standing aside the "Body Corporate Committee" and the "Body Corporate Manager" and empowering an administrator to also examine" the various secondary matters.

In my view, applicants have an obligation to clearly state the orders they are seeking. I do not consider that somewhat equivocal suggestions contained in the supporting grounds to an application adequately put other parties on notice that an adjudicator may make an order on those issues. In my view, this concern is borne out by the fact that submissions in response to the application have generally either not addressed the secondary issues at all, or have addressed these issues in a relatively brief fashion.

Secondly, and equally as importantly, I am very concerned about the way that the supporting grounds regarding the secondary issues have evolved in the course of the administration of this application. When the secondary issues were originally raised by the Applicants in the 11 July 2003 letter, the supporting grounds regarding these issues were, in my opinion at least, scant. The supporting statements presented by the Applicants regarding these five purportedly serious issues were contained in a single page of explanation. While the Applicants allude to the fact that they have further and fuller particulars regarding the issues, rather than providing a fuller explanation at the time, the Applicants simply invite the Commissioner to request further material and evidence from them.

I agree with the Committee’s submission that the presentation of these purportedly serious issues in this fashion appears to be something of a fishing expedition. In my view, applicants have a responsibility to present all relevant information supporting an outcome they are seeking, with their original application. This is supported by section 239(2)(c) of the Act which requires applicants to present the grounds on which an outcome is sought, in detail. This process allows affected parties to an application a proper opportunity to review and respond to, the grounds supporting the outcome being sought by an applicant.

In this case, the bulk of the Applicants’ arguments regarding the secondary issues have been presented in the Applicants’ replies to submissions. Affected parties do not have a statutory right to respond to this material. This is, for obvious reasons, procedurally unfair.

Furthermore, while the Commissioner and adjudicators have certain investigative powers, I do not consider that it is the role of the Commissioner or adjudicators to investigate broad statements by applicants. I consider that the Applicants’ invitation to the Commissioner to request them to provide further particulars supporting their application understates the Applicants’ responsibility to present and substantiate their own case. To reiterate, all applicants should present full grounds and any relevant documents and evidence supporting their application, in the first instance.

For all of these reasons, I do not intend to consider the secondary issues raised by the Applicants in the context of this application. As a result, I also do not intend to consider the allegations of false and misleading information regarding the secondary issues, as this information does not materially impact on my determination of this application.

I will now turn to the substantive issues raised by the Applicants, and the outcomes sought in the original application. From my reading of the application, the Applicants have three main grounds for objecting to the validity of the 31 March 2003 annual general meeting, or more specifically, to the validity of motions 13, 15, 17 and 18, and the election of committee members. I will consider each of these grounds in turn.

In the supporting grounds to the application, the Applicants object to particular comments included by the Committee on the voting papers for the annual general meeting. These comments relate to four motions that were submitted by individual owners.

The voting paper for the meeting shows that motion 13 proposed that the Body Corporate engage a particular Body Corporate Management firm. The voting paper includes the following regarding this motion:

Motion 15 proposed that the Body Corporate engage a solicitor to advise on particular conduct of the then Body Corporate Chairperson, Ms Jill Peters. The following comment is included on the voting paper:

Motion 17 proposed that general meeting minutes be recorded and distributed in accordance with the Standard Module. The following comment accompanies the motion on the voting paper:

Finally, Motion 18 proposes that the Body Corporate engage a returning officer. The Owner submitting the motion raises a concern in an explanatory note about "lost" voting papers for a previous general meeting. The voting paper includes the following comment regarding this motion:

At the time of this meeting (31 March 2003), the Standard Module did not specifically address the issue of whether or not a body corporate committee was permitted to include explanatory notes (or any other form of commentary) about motions submitted by owners, as part of the voting papers for a meeting.

However, I am aware that this issue has been previously considered by another Adjudicator (Mr CG Young) in relation to an earlier dispute resolution application regarding the "Kings Row South" Body Corporate^[1]. In that matter, a number of owners objected to the inclusion of what they referred to as "intimidatory explanatory notes" by the Committee in the voting papers for a general meeting.

In his decision, Mr Young made the following comments:

I agree with Mr Young’s comments. As a result, I do not agree that at that time, the simple inclusion of explanatory notes by the Committee about owners’ motions was an illegal act that impacted on the validity of the annual general meeting. However, if the comments were false, misleading or otherwise unfair, then there could be some argument that the comments resulted in unfair outcomes of the meeting that should not be allowed to stand.

However, in this instance, the Applicants have not presented any real argument demonstrating how the comments were unfair, false or misleading. I am also mindful that no owner has made a submission indicating that they were misled by the Committee’s comments. In this case the Applicants focus on the simple inclusion of the comments, and their view that the inclusion was an illegal act. For the reasons outlined above, I would not disrupt the outcomes of the meeting on this basis.

As a final note on this matter, I would point out to all parties that the legislation regarding this issue has recently been amended^[2]. Owners and the Body Corporate should familiarise themselves with the new section 42C of the Standard Module which details new rules regarding explanatory material accompanying voting papers. This provision commenced on 1 December 2003.

The Applicants also object to the inclusion of certain identifying marks (a hand symbol) on the ballot papers for the election of committee members conducted at the 31 March 2003 annual general meeting.

I have examined a copy of the ballot papers for the meeting which include a hand symbol against the names of particular nominees. A key to the ballot paper states that the hand symbol "denotes" the current member of the committee.

In the supporting grounds to the application, the Applicants state that:

While the legislation does set out minimum requirements for ballot papers (section 16(5) of the Standard Module for secret ballots and section 17(5) for open ballots), I do not agree with the Applicants that these provisions automatically prohibit the inclusion of symbols identifying current members of the committee that are standing for re-election. I am unaware of any express stipulation in the Standard Module (before or after the 1 December 2003 amendments) preventing committees from including such identifying marks on ballot papers.

As well as objecting to the inclusion of the symbols, the Applicants also consider that in the case of the ballot for chairperson, the symbol was in fact misleading. Specifically, the ballot paper indicates that Mr Keith Arnold was the current chairperson, whereas Ms Jill Peters held the position of chairperson at that time.

In her submission, Ms Peters makes the following comments regarding this issue:

While the first part of Ms Peter’s comment may be technically correct in that Mr Arnold was a current committee member, albeit not the chairperson, I do consider that it would be very easy for owners to interpret the presence of the "denotes current member" symbol on the ballot for chairperson to mean that Mr Arnold was currently holding the position of chairperson. However, I would not disrupt the committee election, or the annual general meeting on this basis. Firstly, I am in some agreement with Ms Peters that it is likely that most owners would be well aware of the person that is holding the position of Body Corporate Chairperson at any particular time. Secondly, and somewhat more importantly, I have not viewed any submissions from owners indicating that they were in fact misled or otherwise confused by the symbol identifying Mr Arnold as the current chairperson.

For the reasons outlined above, I would not disrupt the 31 March 2003 annual general meeting, or the election of committee members on the basis of the symbols included by the Committee on the ballot papers.

From the material, I understand that following receipt of the notice of the 31 March 2003 annual general meeting, one of the Applicants wrote to the Chairperson expressing concerns about a number of issues relating to the meeting material, including their objection to the Committee’s inclusion of comments and annotations on the voting papers and ballot papers for the meeting. The Applicants have provided a copy of this letter, which is dated 9 March 2003.

The Applicants state that no reply was received to this letter, notwithstanding a comment seemingly to the contrary included in the minutes of a committee meeting held on 13 May 2003.

I do not intend to consider this issue in any detail in the context of this application. Basically, whether or not the Applicants have genuine concerns about the performance or responsiveness of the Committee or the Body Corporate Manager, the Applicants have not shown how the failure of either the Committee or the Body Corporate Manager to reply to the letter of 9 March 2003 actually impacts on the validity of the annual general meeting.

For the reasons outlined above, I am not satisfied that the outcomes of the annual general meeting of the Body Corporate should be disrupted on the grounds submitted by the Applicants, and I have dismissed the application.

Section 270(1)(c) of the Act allows an adjudicator to dismiss an application if it appears to the adjudicator that the application is "frivolous, vexatious, misconceived or without substance". The Act goes on to provide that if an application is dismissed under section 270(1)(c), an adjudicator may order costs against the applicant "to compensate the person against whom the application was made for loss resulting from the application" (section 270(3)). The amount of costs awarded in such an order cannot exceed $2,000 (section 270(4)).

A number of persons making submissions in response to this application express concern about costs incurred by the Body Corporate in responding to this and previous applications submitted by at least some of the Applicants. Some submissions also contain a request that I issue an order to compensate the Body Corporate for these expenses.

In this instance, I have dismissed the application on its merits, and not on the basis that the application is frivolous, vexatious, misconceived, or without substance. As a result, I do not intend to make a costs order under section 270(1)(c).

I am concerned about certain aspects of how the Applicants have conducted their application. For instance, it seems to me that the failure of the Applicants to properly articulate the outcomes they were seeking in the first instance, together with their attempts to subsequently expand the parameters of the dispute in a series of later (and sometimes voluminous) correspondence, have contributed to the material become unnecessarily lengthy and difficult to assess.

However, notwithstanding these concerns, I am not satisfied that other parties to the application have adequately shown in a legal sense that the application was frivolous, vexatious, misconceived, or without substance warranting dismissal under section 270(1)(c) with an supplementary order for costs.

^[1] Reference Number 0714-2000
^[2] Body Corporate and Community Management Legislation Amendment Regulation (No.1) 2003.

•	Whether the inclusion of comments and annotations on the ballot papers and voting papers of the 31 March 2003 annual general meeting impact on the validity of that meeting; and
•	Whether these claimed irregularities warrant the appointment of an administrator to convene a fresh annual general meeting of the Body Corporate.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kings Row South [2004] QBCCMCmr 239 (10 May 2004)