The Meadows [2004] QBCCMCmr 38 (21 January 2004)

Last Updated: 30 September 2005

REFERENCE: 0404-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20691
Name of Scheme:	The Meadows
Address of Scheme:	154 Currumbin Creek Road CURRUMBIN QLD 4223

TAKE NOTICE that pursuant to an application made under the abovementioned Act by D Wright, M Rowlands & E Strahan, the Owner(s) of lots 12, 25, 22 respectively

I hereby order that the application for orders that the annual general meeting of 31 May 2003 be invalidated and an administrator be appointed is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0404-2003

"The Meadows" CTS 20691

Application

The Meadows Community Titles Scheme (The Meadows) is a 63 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme was designed for residential purposes.

This application is by Denise Wright, Margaret Rowlands, and Ellen Strahan (applicants) seeking orders against the body corporate (respondent).

Background

The applicants have alleged that there were a number of irregularities in the body corporate’s annual general meeting on 31 May 2003. They are seeking that this meeting be declared invalid and an administrator be appointed to act for the body corporate.

Submissions

The applicants provided detailed submissions listing a number of alleged irregularities.

There were a number of submissions opposing the invalidation of the meeting and appointment of an administrator. Over forty owners signed a submission to the effect that the majority were satisfied with the outcome of the meeting and opposed the orders sought.

Decision

Entitlement to orders sought

The applicants provided detailed submissions that demonstrate a thorough understanding of the Act. However, at the outset, it is important to recognise that not every contravention of the Act will justify invalidating a meeting and appointing an administrator.

An adjudicator may make orders that are just and equitable in the circumstances to resolve a dispute (Act, 276). As a first step, the applicant must satisfy the adjudicator of the merits of their claim. However, the applicant must also satisfy the adjudicator that the orders they are seeking are just and equitable.

An applicant typically needs to establish that a contravention of the Act resulted in injustice before it can be ‘just and equitable’ to invalidate an annual general meeting. This is because annual general meetings are critical to the functioning of bodies corporate. These meetings give owners an opportunity to adopt budgets, elect representatives to serve as committee members, and vote on matters of importance to the body corporate. Without meetings, bodies corporate could not function. Further, invalidating an annual general meeting can cause delays in the implementation of important resolutions and the levying of contributions. It also increases costs and inconvenience to owners when the meeting has to be held again.

I am therefore reluctant to invalidate The Meadows annual general meeting of 31 May 2003 unless there is satisfactory evidence that the non-compliance with the legislation resulted in clear injustice. In this respect, I refer to a statement of His Honour Judge Boulton "The very detailed provisions of the standard module regulation to which I have referred above make it almost inevitable that from time to time there will be non-compliance.
Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide".^[1]

Notice of Meeting

The notice of meeting fails to comply with the legislation in several respects. It was not accompanied by proxy forms giving owners an opportunity to appoint a proxy to attend the meeting on their behalf (Standard Module, 42(3)(b)). The agenda did not contain the substance of all motions to be considered (Standard Module, 45). The voting paper contained errors in stating the type of resolution required and the person who proposed the motion (Standard Module, 42(3)(c)). The voting paper also failed to identify the voter and lot number, which is necessary to record details of the vote (Standard Module, 56(4)).

These are serious matters, particularly as a professional body corporate manager apparently prepared the notice of meeting. However, there is no satisfactory evidence that these contraventions resulted in injustice.

The minutes of the annual general meeting show that all resolutions passed were with a majority of 37-42 in favour and 0-3 votes against. The only resolution that was defeated was a motion to set all unit entitlements to the same value, requiring a resolution without dissent. This motion was defeated with 8 votes against, well in excess of the 1 vote necessary to defeat a resolution without dissent.

The applicants are correct in asserting that the above contraventions are of concern. In particular, failure to identify the voting papers could lead an incorrect record of votes and allegations of vote rigging. However, there is evidence of large margins in favour of the motions passed and the majority of owners have provided submissions supporting the validity of the meeting. I am satisfied that, despite the irregularities, the vast majority of owners considered the notice of meeting effective and considered that voting was conducted in a democratic and fair manner.

Owners appear to have obtained proxy forms when desired, even though they were not contained with the notice of meeting. The substance of all motions were given on the voting paper if not on the agenda, any errors in counting votes would not have affected the result due to the large voting margins, and there is no evidence of deliberate fraud.

There is an argument that the secretary forwarded an amended page of the voting paper to only the three applicants, correcting a typing error that resulted in the applicants names failing to be listed correctly against the motions they had submitted. I accept that this failure to list the applicants name correctly was not done maliciously and do not accept the owners voting on these motions would have voted any differently had they received a corrected voting paper.

There are also arguments that some proxies were invalid, one voting paper was left in the mailbox even though delivered on time, and votes of co-owners were counted as two votes instead of one. However, even if these arguments were accepted the large margins in favour of the motions would still have carried the motions. I therefore accept the submission of the majority of owners to the effect that they are satisfied their votes were properly made and will not invalidate the vote for the irregularities claimed.

Election of committee

Election for committee members must be by secret ballot unless the body corporate resolves, by ordinary resolution, to hold the election by open ballot (Standard Module, 12(2)).

The applicants object that the election of chairperson was not by secret ballot. There was a failure to forward an envelope marked ‘ballot paper’ and a separate ‘particulars envelope’ for the lot owners details (Standard Module, 16(6)). However, rather than the ballot proceeding as an ordinary ballot with lot owners signing their ballot paper and writing their lot number on the paper, the majority of lot owners submitted their vote anonymously. In effect, the ballot was ‘secret’. The non-compliance was in the failure of provision of particulars of who was actually voting (Standard Module, 16(7)).

It is a concern that the body corporate did not obtain particulars of who provided votes. This opens up the possibility of allegations of vote rigging. However, the chairperson was elected with a claimed majority of 41 votes in favour and only 4 votes against. The submissions of the majority of owners satisfy me that there would not have been a different result even if there had been full compliance with the secret ballot procedures. I therefore consider the chairperson was properly appointed.

I also consider all ordinary members of the committee were properly appointed. The number of candidates nominated meant the committee consisted of less than the required number of members for the committee. Therefore, the person chairing the meeting was required to declare the candidates to have been elected as ordinary members and no election was necessary (Standard Module, 22(3)). This is effectively what occurred. There was no need to invite further nominations for ordinary committee members from the floor as the number of the committee was still more than three (Standard Module, 22(4)). The chairperson should have invited nominations from the floor to fill the executive member positions (Standard Module, 21(2)). However, there is no evidence that anyone would have accepted a nomination for these positions.

On 12 June 2003 the committee resolved unanimously to appoint the body corporate manager, Marika Maselli, as non-voting Secretary and Treasurer. This appears to have been according to a provision requiring the committee to fill vacancies (Standard Module, 25(3)^[2]). This was prior to recent amendments, at a time when it was lawful for a body corporate manager to hold the position of non-voting secretary and treasurer (Standard Module, 10(3)^[3]). I am therefore not prepared to invalidate this appointment.

However, the body corporate should be aware of changes to the Standard Module effective from 1 December 2003. These mean that a vacancy in an executive member position after an annual general meeting requires the calling of an extraordinary general meeting to fill the vacancy (Standard Module, 24A). Further, body corporate managers are automatically appointed non-voting members of the committee but can no longer hold executive positions (Standard Module, 9A, 9(5)).

Despite these changes to the legislation, the appointment of the body corporate manager as secretary and treasurer remains valid until the next annual general meeting (Standard Module, 156).

Appointment of body corporate manager

The applicants submit that a body corporate manager can only be appointed if a motion to that effect is put before the meeting and two quotes are obtained and submitted.
It is correct that a motion is required to be passed by ordinary resolution to validly appoint a body corporate manager (Standard Module, 87(2)). However, two alternative quotes only need to be put before the meeting if the total amount payable under the contract exceeds the relevant limit for major spending for the scheme (Standard Module, 104). This limit is worked out by multiplying the number of lots in the scheme by $250, giving $15,750. It is good practice to give owners details of quotes and a choice of who they wish to appoint. However, this is only required by legislation when the amount of the quote exceeds the limit for major spending for the scheme.

Other matters

The applicants make submissions on some further matters including a delay in being given access to body corporate records. I am not persuaded that it is necessary to make any orders based on these additional submissions.

Order

The applicants have shown some failures to comply with the legislation. These failures are of concern, especially when many of them appear to have been committed by a professional body corporate manager. However, I am not persuaded that the annual general meeting would have resulted in a different outcome if these failures had not occurred.

As stated above, failures to comply with the legislation are a serious matter and can potentially lead to injustice. However, not all contraventions will lead to injustice sufficient to invalidate an annual general meeting of the body corporate.

In this instance, the applicants have failed to establish any clear injustice resulting from the contraventions and I am unwilling to grant the orders sought. The application is therefore dismissed.

^[1] Wei-Xin Chen v. Body Corporate for Wishart Village CTS 19482, District Court of Queensland, D4080 of 2000, 29 May 2001, unreported.
^[2] This provision was subsequently amended, effective from 1 December 2003.
^[3] This provision was subsequently amended, effective from 1 December 2003.