Heritage City Villas [2004] QBCCMCmr 361 (20 July 2004)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Gayle Janelle Derry, the owner of lot 18

I hereby order that the secretary of the body corporate shall, within 10 days of the date of this order forward a notice of meeting to all owners calling an extraordinary general meeting in accordance with the Notice of Requisition of Extraordinary General Meeting forwarded to the secretary on 18 June 2004.

I further order that the meeting shall be held not more than 28 days after the date upon which the notice of meeting is forwarded to owners.

I further order that the secretary shall include on the agenda of the meeting any other motions which have been submitted to the secretary prior to the date upon which the agenda is prepared.

I further order that the secretary shall within 5 days of the date of this order forward a copy of this order and the accompanying statement of reasons for decision to all owners.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0449-2004

"Heritage City Villas" CTS 19536

The applicant, Gaye Janelle Derry, has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

A declaration that the body corporate should if in doubt as to the legitimacy of documents purportedly executed by lot owners, make enquiries with the said lot owners as to execution of same.

The applicant has also sought an interim order of an adjudicator as follows:

That in accordance with the applicant’s Notice of Requisition of Extraordinary General Meeting, an extraordinary general meeting be called within 21 days from the date of this order and otherwise held in accordance with the requirements of the Module.

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

(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)).

Section 279(1) of the Act 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 of the application.

In the supporting grounds the applicant provided the background to this dispute. I note that the applicant, although an owner of a lot in the scheme, is also either a director or the secretary (having signed the Deed of Assignment dated 5 February 2003 in such capacity) of Derry Nominees Pty Ltd (Derry Nominees), the caretaker and letting agent (caretaker). In summary, Derry Nominees became the caretaker on 28 February 2003, after the assignment of the caretaking and letting agreement (the agreement). At that time, the agreement was due to expire on 2 August 2003 unless a further option of 5 years was exercised not more than 6 months and not fewer than 3 months before the expiration date. Derry Nominees failed to exercise the option within the requisite time, or at all. It seems surprising that Derry Nominees would not have exercised the option at the same time as signing the Deed of Assignment as that date fell within the time frame for exercising the option. Perhaps that is a matter that it will take up with its legal advisors of the time (not the same firm as is acting for it on this application).

The applicant provided copies of various correspondence which has passed between the solicitors acting for Derry Nominees and the solicitors acting for the body corporate. This correspondence reveals that the body corporate, although initially prepared to allow Derry Nominees to remain in its position on a month to month basis whilst its longer term future was discussed, has now withdrawn that offer and has formally terminated Derry Nominees’ engagement.

Following that advice, a Notice of Requisition of extraordinary general meeting was forwarded to the secretary on 18 June 2004. The Notice was purportedly signed by 15 owners in the scheme.

On 21 June 2004 a letter was sent to all owners by the secretary, on behalf of the body corporate committee. In that letter owners were provided with a summary of recent events in relation to the agreement with Derry Nominees. In particular owners were advised:

On 23 June 2004 the body corporate’s solicitors advised Derry Nominees’ solicitors:

"...neither the committee nor the body corporate manager will be calling an EGM as requested by your client. The body corporate manager has advised us that he is not satisfied with the material supplied to him and in particular notes that none of the documents show original signatures and appear only to be photocopies. In addition, the material that has been provided to him does not in any way indicate that the owners were specifically aware of the actual motions that are proposed for the EGM as the motions had been delivered to our client as a separate loose set of motions, separate from the requisition form. Consequently, the body corporate manager is not prepared to accept it as a valid requisition to call a meeting."

In addition, the body corporate’s solicitors advised that as far as the body corporate was concerned, the agreement was at an end but that the body corporate reserved its rights against Derry Nominees in relation to various breaches of its obligations under the agreement, its misconduct in relation to the operation of the business and the carrying out of its duties and obligations under the agreement. The solicitors then particularised some of the alleged breaches.

On 25 June 2004, Derry Nominees’ solicitors advised the body corporate’s solicitors that all owners were provided with copies of motions and documents that were to be included with the agenda. They further stated that there is no requirement under the Module for signatures to be in original form. They observed that it was inappropriate (although the word "appropriate" appeared in the letter) for the body corporate to impose that requirement, when many owners who had signed the Notice resided in various parts of the country. The solicitors concluded:

"Calling a general meeting, which is something our client will force, whether through owners votes (as already submitted) or a Commissioners application can be avoided if your client simply does what has been asked of it by owners. This letter will be pleaded in any subsequent proceedings as confirmation of our clients intent to resolve the matter through means other than litigation."

On 30 June 2004 the body corporate’s solicitors responded to the above letter. They advised:

On 16 July 2004 Derry Nominees’ solicitor advised Timothy Williams, a member of the Commissioner’s staff that he had received no further communication from the body corporate’s solicitors.

Section 61 of the Standard Module, by which this scheme is regulated, provides:

general meeting") of the body corporate must be called if a notice asking

(2) The secretary may be presumed to be absent if a notice is given to the

meeting has not yet been held.

I am satisfied that the applicant has demonstrated the requisite urgency to warrant consideration of an interim order. The scheme is presently without a caretaker and letting agent. Owners have been invited by the committee to discuss their letting arrangements with an external licensed real estate agent (and for this purpose were provided by the committee with the business cards of three local agents), however owners who have previously had their letting handled by the on-site letting agent may well find this option inconvenient. Additionally, even if a short term arrangement in relation to caretaking has been put in place, it is obviously desirable that owners should be afforded the earliest opportunity to consider a permanent arrangement for the scheme.

The application has been referred to me by the Commissioner notwithstanding that notice of the application has not been given under section 243 of the Act and all persons entitled to make submissions about the application have not had the opportunity to make submissions. I have decided to make an interim order without seeking submissions because in my view the body corporate has been put on notice that such an application was likely, and because I would expect that any submission made to me by the body corporate would be likely to reiterate (to the extent relevant to the actual order sought) the contents of the correspondence between the parties with which I have already been provided, and to which I have referred above.

I find that proper notice requisitioning an extraordinary general meeting was given to the secretary on 18 June 2004. I have checked the names of those who have signed as owners against the Titles Office records, and I am satisfied that 14 of the 15 lots for which signatures appear have been signed by at least one registered owner. The 15^th lot, (lot 2) for which "G. Labinsky" signed as owner, is not registered in that name (and there is no Settlement Notice recorded on the title deed), even though the name "Gaye Labinsky" appears on the list of owners provided by the body corporate manager at my request. However, as there are 42 lots, then it was only necessary for there to be signatures on behalf of 11 lots in order to satisfy section 61(1)(a).

I do not accept the secretary’s reason for refusing to call the meeting. There is no requirement in the regulations that the signatures on the notice given to the secretary must be original. Derry Nominees’ solicitors advised the secretary that many of the owners who had signed the Notice of Requisition lived "all over the country" (a fact of which the secretary would obviously have been aware, given that the roll of owners was in his possession). I have been provided with a list of owners, and note that the owners of 7 of the lots whose signatures appear on the notice have an address for service either in New South Wales or in Victoria, and, of those, one group’s address is in country New South Wales, where mail services would be slower than to larger cities or regional centres.

Clearly, Derry Nominees was anxious to have an extraordinary general meeting held, and mailing the notice to owners and waiting for it to be returned in similar fashion would have taken time. Accordingly, the use of facsimile transmission would have been an effective (and in my view acceptable) method of shortening the time frame. Whilst it is not specifically provided in section 61 of the Standard Module that the notice asking for an extraordinary general meeting, having been signed by owners and returned by facsimile transmission, can then be given to the secretary, I find that the absence of a specific provision enabling it to be given in that manner does not require the interpretation that it cannot be so given.

In most situations where an extraordinary general meeting is requested by owners there will usually be a coordinator for the gathering of the requisite number of signatures on the notice. I expect that this case was no different. Once again I find that there is nothing to prevent signatures being obtained in this fashion and then being submitted by one person. This is distinguishable from the situation where voting papers must be delivered personally and must not be gathered by one party and submitted to the secretary (Body Corporate for Surfers Waters v Angland).

Although I have dealt principally with the application for an interim order, I propose to refer to the final order, sought by the applicant as a declaratory order.

In my view it goes without saying that if a document is submitted to the secretary, or to the committee as a whole, and there is any doubt as to the authenticity of the signature on the document, then common sense would dictate that the way to resolve the matter would be to make an enquiry of the person who purportedly signed the document. That is precisely what the secretary should have done in this instance.

I consider that the decision to simply ignore the notice calling for an extraordinary general meeting, on the basis that some of the signatures were photocopied (or more correctly had been submitted by facsimile transmission), was seriously flawed. In this instance, I understand why the applicant has sought the declaratory order, as it must have been frustrating to find, having gathered the requisite signatures, that the secretary refused to call the meeting on such a spurious basis. It is difficult to understand why the secretary, and the committee as a whole, failed and/or refused to recognise that the issue was one which should have been dealt with expeditiously, if for no other reason than to give owners some certainty in relation to their investments. However, I do not propose to make a declaratory order as sought, simply because there must be a line drawn as to the range of matters in respect of which an adjudicator’s order might be made. Having said that I would certainly expect that if the secretary were in the future to receive a signed document about which he had any queries that he would not waste everyone’s time (and cause parties to incur legal expenses needlessly), and would verify the authenticity of the document immediately.

These orders, although made in response to the application for an interim order, dispose of the application in its entirety, and no final order will be made.

Number of Scheme:	19536
Name of Scheme:	Heritage City Villas
Address of Scheme:	11 Newtown Street EAST IPSWICH QLD 4305

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Heritage City Villas [2004] QBCCMCmr 361 (20 July 2004)