Collina [2004] QBCCMCmr 30 (16 January 2004)

Last Updated: 30 September 2005

REFERENCE: 0021-2004

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11757
Name of Scheme:	Collina
Address of Scheme:	20 Rudd Street, BROADBEACH QLD 4218

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Ms Joan Hoare, the Owner(s) of lot 2

I hereby order that the application for an order that the extraordinary general meeting to be held on Monday, 19 January 2004 be stopped is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0021-2004

"Collina" CTS 11757

Interim Application

Collina Community Titles Scheme (Collina) is a 12 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Standard Module Regulation (Standard Module).

This is an application for interim orders. It arises out of an application by Joan Hoare (applicant) seeking orders against the body corporate for Collina (respondent).

Interim Orders Sought

The applicant has a number of concerns about the legality of aspects of the extraordinary general meeting arranged for 19 January 2004. These concerns include:

• A concern that owners are not being given a choice about which body corporate manager they would like to appoint;
• A concern that the meeting proposes to confirm incorrect minutes of the previous annual general meeting; and
• A concern that the meeting proposes to adopt administration and sinking fund budgets that will disadvantage owners.

The applicant is seeking an interim order to stop the meeting on 19 January 2004 going ahead.

Due to the short time frame before this meeting, I have conducted a teleconference with the applicant and the chairperson in respect of this interim order. However, no final orders will be made until after the body corporate has been given an opportunity to make formal submissions about the final orders sought.

Decision

Interim injunctive relief

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

The applicant is seeking orders of an injunctive nature designed to prevent an extraordinary general meeting of the body corporate from going ahead. For it to be just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I would need to be satisfied that the application raises a serious question to be determined. I would also need to be satisfied that the balance of convenience between the parties justifies the grant of injunctive relief. That is, I would need to balance the inconvenience to the body corporate of stopping the meeting when it may subsequently be shown to be valid against the inconvenience to the applicant of allowing the meeting to proceed when it may subsequently be shown to be invalid.

Serious question to be determined

The applicant appears genuinely concerned that the body corporate is not being managed effectively. However, the evidence before me does not satisfy me that there is anything unlawful about the proposed meeting that would justify stopping the meeting from proceeding.

The applicant is concerned that the body corporate committee has gone beyond its authority by improperly appointing Strata & Body Corporate Services as a body corporate manager. It is clear that the body corporate has not validly appointed a body corporate manager. For a valid appointment, owners must pass an ordinary resolution engaging the body corporate manager (Standard Module, 87). The chairperson confirms that Strata & Body Corporate Services have not been appointed as body corporate managers but are merely providing some administrative assistance to the committee free of charge in the hope that owners will appoint them as body corporate managers at the upcoming meeting. There is nothing contrary to law in Strata & Body Corporate Services doing this.

The applicant says that owners would prefer to have a choice of body corporate managers and an opportunity to compare quotes for different body corporate managers. However, the legislation only requires alternative quotes to be listed for motions that would involve major spending (Standard Module, 104). The relevant limit for major spending is calculated by multiplying the number of lots by $250, giving $3,000. The proposed appointment involves spending of less than this amount meaning alternative quotes are not required. Of course, this does not prevent the owners from voting against the motion and subsequently putting forward motions to consider alternative body corporate managers.

The applicant has also submitted that some owners have not received copies of the proposed terms of engagement of Strata and Body Corporate Services as a body corporate manager. The motion seeking appointment of Strata and Body Corporate Services states that the terms of appointment would be those in the management agreement enclosed with the notice of meeting. The applicant said that no copy of the management agreement was enclosed with her copy of the notice for general meeting. Although she had already received a copy on another occasion she was concerned that other owners may not have received a copy of the management agreement. On the contrary, the chairperson claimed that all owners had been sent copies of the management agreement and he would check that this was the case. It is not possible for me to determine if all owners have received a copy of this agreement. However, the legislation requires that the terms of an engagement of a body corporate manager be sent to all owners (Standard Module, 87(c)). If owners vote to appoint the body corporate manager but subsequently become aware of terms of engagement that they do not agree with then this could provide a basis for those owners to seek to invalidate the appointment.

A second issue raised by the applicant is that she prepared minutes of the annual general meeting on 11 November 2003 as outgoing secretary of the body corporate. She also suspects that another person prepared minutes but these other minutes have not been distributed to all owners. The applicant is concerned to ensure that any minutes confirmed for the annual general meeting be the minutes that she prepared. I am satisfied that the motion to confirm minutes refers to the minutes prepared by the applicant as outgoing secretary as the motions specifically states "THAT the minutes of the Annual General Meeting held on 11^th November 2003 and forwarded to lot owners^[1] be confirmed and signed as a true and correct record of proceedings at that meeting".

The final issue is whether the proposed administration and sinking fund budgets will disadvantage owners if adopted at the extraordinary general meeting. The sinking fund budget should provide a ten-year estimate of anticipated expenditure of a capital or non-recurrent nature (Standard Module, 94(3)). The administrative fund should contain estimates of all other body corporate expenditure for the financial year (Standard Module, 94(2)). If these estimates are unsatisfactory then owners can be disadvantaged either by overpayment of levies or underpayment resulting in additional costs and inconvenience through the imposition of special levies.
However, the applicant has not shown any legal basis for preventing the extraordinary general meeting proceeding on this basis. The owners should choose to either pass or refuse to pass the budgets. If the budgets are not passed then it will be necessary to call a subsequent extraordinary general meeting to pass satisfactory budgets.

Balance of convenience

Even if the applicant established serious questions about the legality of the upcoming meeting I would not be satisfied that the balance of convenience favours stopping the meeting.

The meeting has already been arranged and is due to be held on 19 January 2004. If this office made an interim determination that the meeting should be stopped and subsequently made a final determination that the meeting was lawful then the body corporate would be put to the inconvenience of calling the meeting again.

It seems preferable to allow owners to attend the meeting as proposed and vote on the intended resolutions. If resolutions were passed and the final determination shows them to be unlawful then these resolutions could be invalidated at that later date. If a specific resolution was likely to become irreversible within the time taken to make a determination then an order could be sought putting that resolution on hold pending the final determination. There is no necessity to stop the entire extraordinary general meeting from proceeding.

Order

I am not satisfied of any serious questions about the lawfulness of the upcoming meeting or that it would be for the benefit of owners to stop the meeting.

Interim relief is therefore declined. The application will be allowed to proceed to submissions and final determination in the normal course.

^[1] my emphasis