Adelaide Mews [2004] QBCCMCmr 289 (3 June 2004)

Last Updated: 30 September 2005

REFERENCE: 0103-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	23648
Name of Scheme:	Adelaide Mews
Address of Scheme:	10 Lancaster Court NERANG QLD 4211

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the Body Corporate for Adelaide Mews

I hereby order that the application by the body corporate of Adelaide Mews for an order that the adjourned EGM held on 31/08/99 and the motions passed at that meeting be ratified and that they be retrospective to the date of that meeting, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0103-2004

"Adelaide Mews" CTS 23648

The applicant, the body corporate of Adelaide Mews has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote –

That the adjourned EGM held on 31/08/99 and the motions passed at that meeting be ratified and that they be retrospective to the date of that meeting.

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

The scheme is a subdivision of 7 lots registered under a group title plan (now a standard format plan). The regulation module applying to the scheme is the standard module.

The application and submissions

This office sought submissions in respect of the application from the named respondents, Claude George Ciacchi and Anna Molenda, the owners of lot 5 and all owners. I do not intend to set out in any detail the applicant’s grounds, nor the contents of submissions in response. I am satisfied that all parties are aware of the position of the other from the application, submissions and the right of reply processes. I therefore intend only to refer to those materials necessary for a determination of the issues raised.

The applicant body corporate has sought an order that certain motions purportedly carried at an adjourned meeting in 1999 be ratified or validated, "and that they be retrospective to the date of that meeting".

I will deal with the second part of the requested relief first: that the motions be "retrospective to the date of that meeting". This is illogical in my view. The motions purportedly carried in 1999 are either valid or invalid. If they are valid, then they apply to the period from the date of the meeting. Retrospectivity is irrelevant. If the applicant is instead intending that certain motions carried at an AGM held on 5 January 2004, and in very similar terms to relevant motions carried at the 1999 adjourned meeting, be "retrospective" so as to apply to the period from 1999 on, then I will not order to this effect. The motions purportedly carried in 2004 are not expressed to be retrospective. Secondly, I would have serious reservations about ordering that such motions might operate retrospectively, given the penalty or penal nature of their provisions. The effect of this is that the 2004 motions do not support the validity of the 1999 motions. The 1999 motions were not ratified by the 2004 motions and are either valid or invalid for reasons associated only with the motions themselves, or the legality or otherwise of the meeting generally.

This raises the question of the validity of the 1999 motions. The body corporate seeks an order that the relevant motions be "ratified" or presumably validated. The motions in question deal with the imposition of penalty interest on outstanding or overdue contributions, and the recovery of legal costs.

The solicitor for the respondent has challenged the validity of the 1999 motions on the basis that the 1999 EGM "was not validly convened, owing to, on the face of the minutes of the meeting, a failure to wait 30 minutes as required under section 48(4) of the standard module".

In my reasons for decision in respect of application 289 of 2002 I stated as follows:

Adjudicators of this office have established a principle regarding applications which seek to validate, rather than invalidate, either a meeting, or certain aspects of a meeting. The basis for this principle was set out in an order to a previous application (No. 0708 of 1998), part of which Adjudicator’s statement of reasons provided, quote -

In effect, the applicant seeks a declaration that the meeting has been validly convened. The resources of this office are not such that this office is able to undertake a complete investigation, particularly at an interim stage, of all aspects of the meeting, and declare it to have been validly convened, as the applicant seeks. If this office adopted the course of action sought of it by the applicant, then I consider that this would lead to multiple similar applications, which would be beyond the resources of this office.

Rather, I consider the onus is upon the applicant as the secretary having convened the meeting, to ensure that requirements of the Act and Standard Module were complied with, and provided the applicant has done this, then the meeting will presumably withstand any challenge directed at its validity by others. I consider that it is in this latter scenario that this office should involve itself. That is, if there is a challenge to the validity of the meeting after it having been convened or held, then this office should investigate such challenge, and make such orders as considered appropriate. ...

I acknowledge that the current application seeks only to validate the election of the committee at the meeting, and not the meeting per se. Nevertheless, I consider the principle to be equally applicable. If this office were to investigate meetings with the view to declaring them to be procedurally valid, then it is considered that this approach would invite many applications seeking this declaration, particularly where there are ongoing levels of disputation within schemes (of which there are many).
Investigating such applications would in itself be problematic in that there would be no clear focus of the particular investigation. By necessity, it would need to consider each and every aspect of the procedure for convening and holding the meeting, before any declaration as to the validity of the meeting could be given. In contrast, where an application seeks to invalidate a meeting, then the basis of invalidation is (usually) stated, and it is this particular basis on which the investigation focuses.
To adopt the approach of investigating the validity of meetings, rather than allegations of their invalidity, would exhaust the resources of this office, due both to the number of such applications which might be made, and further, the necessary breadth of such investigations.
Given this principle, I intend to dismiss this application. If any owner considers the meeting, or any aspect of it, to be invalid or not in compliance with the legislation, they are entitled, subject to the time limits set out in section 193 of the Act, to make application to this office seeking invalidation, either of the meeting or the particular aspect. Until such time as an application is made, and there is an order in respect of that application, I consider a body corporate is entitled to proceed on the assumption that the meeting, or aspect, is valid. If it were otherwise, then bodies corporate would not be able to operate effectively.

I see no reason to depart from this above stated principle in respect of this application. I therefore intend to dismiss this application. Certain conclusions might be drawn from this:

Firstly, given that the respondent to this application has not, since 1999 sought to challenge the validity of the relevant motions, then in my view the body corporate is entitled to proceed on the assumption that the meeting, and all motions carried at the meeting, are valid.

The second conclusion is that section 242 of the Act would operate in respect of any application made by the respondents to invalidate the relevant motions. Section 242 of the Act provides certain time limitations on the making of applications for the invalidation of committee or general meeting motions or meetings, and provides –

242 Time limit on certain applications
(1) This section applies to an application for an order declaring void--
(a) a meeting of the committee for the body corporate, or a general meeting of the body corporate; or
(b) a resolution of the committee or body corporate; or
(c) the election of an executive or other member of the committee.
(2) The application must be made within 3 months after--
(a) if subsection (1)(a) applies--the meeting; or
(b) if subsection (1)(b) applies--the meeting at which the resolution was passed or purported to be passed; or
(c) if subsection (1)(c) applies--the meeting at which the executive or other member was elected.
(3) However, if the making of the application does not comply with subsection (2)--
(a) the commissioner must deal with the application (including making a dispute resolution recommendation for the application) as if the making of the application complied with subsection (2); and
(b) an adjudicator to whom the application is referred for specialist or department adjudication may, for good reason, waive the non-compliance.

Relevantly this section allows an adjudicator, in considering an application bought by a party to invalidate a resolution and / or meeting, to dismiss such an application on the basis that there is not "good reason" for the adjudicator to waive the non-compliance with the relevant statutory time limitations. The relevant period for bringing such an application is 3 months from the date of the relevant meeting. In respect of the 1999 meeting, such application to be within time, would need to have been made before 30 November 1999. Consequently any such application is now in excess of 4.5 years out of time. I suggest that an adjudicator would, given this length of time, be very reluctant to now consider there was "good reason" to waive the non-compliance.

I indicate all this by way of information for the parties. I note that the matter is now before a court for recovery. Given the likely defence to be raised – the alleged invalidity of the resolutions at the 1999 meeting – then I suggest that the provisions of section 242 of the Act may be of some relevance to the determination of the issue.