Palm Beach North [2004] QBCCMCmr 422 (1 September 2004)

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

I hereby order that pending a final determination of this application the Body Corporate shall not sign or otherwise execute the caretaking and letting agreement or the right of entry agreement purportedly authorised by the Body Corporate at an extraordinary general meeting held on 12 July 2004.

I further order that pending a final determination of this application the Body Corporate Committee shall consist of the following members:

• Salvatore Mazzarino: Chairperson/Secretary/Treasurer
• Damien Hart: Ordinary committee member
• Kylie Hart: Ordinary committee member
• John Reid: Ordinary committee member
• Sharlene Speers: Ordinary committee member

I further order that pending a final determination of this application, the Committee shall limit its decisions (including decisions to spend body corporate funds) to matters of either a routine or urgent nature which are capable of being determined by a committee under the legislation and that must necessarily be addressed to ensure that the "Palm Beach North" community titles scheme is administered for the benefit of owners of lots included in the scheme.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0452-2004

"Palm Beach North" CTS 31739

On 14 July 2004, the Applicant (a Co-owner of Lot 21) filed a dispute resolution application with the Commissioner for Body Corporate and Community Management under the Body Corporate and Community Management Act 1997 (the Act).

The Applicant states that he is seeking a number of outcomes from this application, including final orders:

Department of Natural Resources, Mines and Energy records show that the "Palm Beach North" community titles scheme was originally created under a building format plan of subdivision registered on 16 September 2003. The scheme land currently consists of 28 lots and common property.

A first community management statement was registered for "Palm Beach North" on 22 September 2003. The community management statement shows that the Act’s Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module) applies to the scheme.

Section 227 of the Act limits the disputes that may be resolved under the Act’s dispute resolution provisions to those between particular persons involved in community titles schemes. This application concerns a dispute between the owner of a lot included in a community titles scheme and the body corporate for the scheme. As a result, the matter is a "dispute" within the meaning of section 227(1)(b).

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

Schedule 5 of the Act sets out a number of examples or orders an adjudicator may issue to resolve a dispute in a community titles scheme. The examples include an order declaring that a general meeting of a body corporate is void for irregularity (example 7) and an order declaring that a resolution purportedly passed at a general meeting of a body corporate was at all times void (example 8). An adjudicator may also make an order appointing an administrator to perform obligations of a body corporate, a committee, or a member of a committee (example 23).

In this case, the Applicant claims (among other things) that the calling of the EGM in question failed to comply with the Act and the Accommodation Module. The Applicant has sought orders declaring that the EGM (and motions purportedly carried at the meeting) are invalid, and an order authorising the calling of a fresh extraordinary general meeting.

In the circumstances, it appears that the application falls within the jurisdiction of an adjudicator.

As mentioned above, this application was filed on 14 July 2004. On 15 July 2004, the Commissioner referred the application to me under section 247(2) of the Act to decide whether an interim order should be issued because of the nature or urgency of the circumstances of the application. The Commissioner’s referral was made even though notice of the application had not been given, and parties had not been given an opportunity to make submissions about the application (section 247(3) of the Act).

Given that the Applicant was seeking an interim order preventing the Body Corporate from entering into agreements purportedly authorised on 12 July 2004 (some 3 days earlier), on 15 July 2004 a staff member of this Office contacted the Body Corporate Manager for the scheme (Body Corporate Administration) on my behalf to find out whether the agreements had already been executed. Ms Kathryn Koen of Body Corporate Administration indicated that the agreements in question had not been signed, and that they would not be signed until after a further extraordinary general meeting of the Body Corporate was held.

Also on 15 July 2004, a staff member of this Office contacted the Applicant and requested further information and material concerning the application. This material was provided by facsimile of the same date. However, in addition, the Applicant indicated that he was under the impression that the agreements had in fact been signed.

To clarify this issue, on Monday 19 July 2004, I requested a staff member of this Office to arrange a teleconference for the same day between the Applicant, Body Corporate Manager and myself. Unfortunately due to the shortness of notice, the Body Corporate Manager was unable to participate and as a result no teleconference was conducted at that time. However, in the course discussing the proposed teleconference, Ms Koen again confirmed that the agreements in question had not been signed.

In the circumstances, I indicated to the parties that I intended to issue an interim order without further reference to the parties. However, the Body Corporate Manager objected to this course of action and indicated that the Body Corporate wished to make a submission prior to the matter being considered for an interim order. I agreed to allow the Body Corporate an opportunity to make a submission about the application prior to my consideration of the application on the condition that the Body Corporate Manager provide me with a written undertaking that the agreements in question would not be signed or otherwise executed pending my consideration of the application for an interim order. The Body Corporate Manager provided an undertaking in similar terms by facsimile of 19 July 2004.

At my request, on 21 July 2004, the Commissioner formally invited the Committee and all owners of a lot included in the scheme to make a written submission about the application. I have before me submissions from a number of lot owners (including the original owner) and the Body Corporate Manager. I do not have before me any submission from the proposed Caretaking Service Contractor purportedly engaged by the Body Corporate on 12 July 2004.

On 30 August 2004, I conducted a teleconference with the Applicant, a representative of the Original Owner (Mr Peter Coundouris), a purported committee member (Mr John Reid) and a representative of the Body Corporate Manager (Mr Niall Marshall) for the purposes of discussing the issues presented by the application.

Before turning to the specific issues presented by this application, it may be of benefit for me to set out a brief summary of my understanding of the meeting and committee history of "Palm Beach North". The following is based on the material before me, as presented by the parties.

The "Palm Beach North" community titles scheme was established on 22 September 2003 upon the recording of the first community management statement for the scheme (section 24(2) of the Act).

An extraordinary general meeting of the Body Corporate was held on 24 September 2003. At this meeting, the Body Corporate made a number of resolutions including a resolution to engage Body Corporate Administration as Body Corporate Manager for the scheme for a period of three years. The Body Corporate also purported to delegate "the powers and authorities of the body corporate and its Committee and the Chairperson, Secretary and Treasurer" to the Body Corporate Manager for the purposes of performing duties set out in the body corporate management agreement. At that meeting, Mr Coundouris was appointed as chairperson and Mr Marshall was appointed as non-voting secretary and treasurer.

A further general meeting (seemingly the first annual general meeting) was held on 14 November 2003. At that meeting Mr Reid (a lot owner) was appointed as chairperson and Mr Marshall was again appointed as non-voting secretary and treasurer.

In December 2003, Mr Reid and Mr Marshall unsuccessfully endeavoured to recruit additional members in order to form a valid committee, that is, a committee consisting of at least 3 members. I understand that in March 2004, Mr Reid resigned from the Committee.

In June 2004, Solicitors for the Original Owner contacted the Body Corporate Manager and requested that a general meeting of the Body Corporate be convened for the purposes of engaging a caretaking service contractor for the scheme. At that time, the Original Owner still owned Lot 13 and held a number of proxies on behalf of other lot owners.

On 11 June 2004, the Body Corporate Manager issued the notice of the EGM that is the subject of this dispute. The minutes of the meeting record that a number of owners contacted the Body Corporate Manager and requested that the meeting be adjourned. However, the minutes also record that it was noted that a meeting could not be adjourned at the request of 25% of the owners, and the meeting proceeded.

The minutes of the meeting show that two substantive motions were carried at the EGM. These motions sought Body Corporate authorisation for a proposed caretaking and letting agreement and a proposed right of entry agreement with a company called Better Cooking and Coffees Pty Ltd. The minutes show that the motions regarding the caretaking and letting agreement was carried with 4 votes in favour, 1 vote against, 3 votes rejected and 1 voter abstaining from voting on the motion. The motion regarding the right of entry agreement was carried with 4 votes in favour and 1 vote against the motion.

A further general meeting has been held on 18 August 2004 (adjourned until 25 August 2004). The relevant minutes show that at that meeting the Applicant, Mr Damien Hart, Ms Kylie Hart, Mr Reid, and Ms Sharlene Speers were purportedly appointed as the Body Corporate Committee.

Section 279(1) of the Act allows an adjudicator to issue an interim order "if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates".

Two examples of possible interim orders accompany section 279(1) and are suggestive of the usual circumstances where an interim order might be made. While the range of matters that may be the subject of an interim order is not capable of definition, it is worth noting that both examples of interim orders included in the Act are in the nature of injunctive relief.

The nature of the examples of interim orders mentioned in the Act, and the fact that the operation of interim orders is generally limited to one year (section 279(2)(a)), suggests that the purpose of interim orders is not to simply expedite a final outcome of a dispute. Rather, it seems to me that generally, interim orders are to be used to preserve a situation, in other words to maintain the "status quo", pending a final determination of the issues in dispute.

In my view, the key issue raised in this application is authority to call the EGM.

The legislation specifically authorises particular persons to call general meetings of a body corporate. Specifically, section 38 of the Accommodation Module provides the following:

After reviewing the material, I have come to a preliminary view that the EGM in question was called without proper authority, for the reasons outlined below.

Firstly, from the material before me I understand that at the time the EGM was called, the Body Corporate Committee consisted of a sole, non-voting member (Mr Marshall). The terms of section 38(1)(a) permit a secretary to call a general meeting, if authorised by the committee. It seems doubtful that a sole non-voting member can make a resolution as a committee to call a general meeting. Therefore, it follows that the EGM could not be called under section 38(1)(a) outlined above.
Secondly, I note that the Body Corporate purportedly delegated the powers and authorities of the Body Corporate and of the Committee to the Body Corporate Manager at the meeting held on 24 September 2003. However, I also note that following amendments to the Act that commenced in March 2003, a body corporate cannot delegate its powers (section 97).

The Act continues to allow a body corporate to authorise a body corporate manager to exercise some or all of the powers of an executive member of the committee (section 119(2)). However, as outlined above, section 38(1)(a) of the Accommodation Module provides that a member of a committee (including an executive member) may only call a general meeting if authorised by the committee. Therefore, even if I accepted that the Body Corporate Manager had been authorised to perform a function of an executive member of the Committee (for example the secretary), it seems to me that to properly call a general meeting the Body Corporate Manager would still require the authorisation of the Committee. As outlined above, I am doubtful that a committee comprised of a single non-voting member can provide such authorisation.

There are two situations where a person may call a general meeting of a body corporate without committee authorisation. Firstly, a person may call a general meeting if authorised by an order of an adjudicator made under the dispute resolution provisions. However, to my knowledge the EGM in question was not authorised by an order of an adjudicator.

Secondly, a general meeting must be called (with or without committee authorisation) if the meeting is required under section 59 of the Accommodation Module. Briefly, section 59 of the Accommodation Module provides a means for the owners of at least 25% of the lots included in a scheme to require a general meeting to be called within a legislated time frame.

In this instance the Original Owner requested the Body Corporate Manager to call the general meeting. At the time, the Original Owner owned one lot included in the scheme, however, also had a number of proxies entitling it to vote on behalf of a number of other lot owners.

I am doubtful that the original owner was entitled to use proxies to require the Body Corporate Manager to call a general meeting of the Body Corporate under section 59 of the Accommodation Module. It seems to me that proxies simply entitle the proxy holder to vote on behalf of a lot owner at a general meeting. I am not convinced that a proxy can be used for purposes outside of voting at a meeting. This limitation on the use of proxies seems evident from provisions of the legislation such as sections 69, 70(1), 72(1) and 72(4) of the Accommodation Module. Indeed the proxy disclosure statement issue by the Original Owner to lot owners in "Palm Beach North" provides that "The seller discloses to the Buyer that the proxy appoints the Seller as its proxy to vote at the First Annual General Meeting or any extraordinary general meeting of the Body Corporate" regarding particular issues (my emphasis).

As a result, I am doubtful that proxies can be used to require a general meeting to be called pursuant to section 59 of the Accommodation Module.

For the reasons outlined above, I have significant concerns regarding the apparent lack of authority for the calling of the EGM in dispute. While I do not intend to make a final determination of these issues in the context of this interim order, I consider that they raise sufficient grounds for an interim order preventing the Body Corporate from signing or otherwise executing the agreements purportedly authorised at the EGM pending a final determination of the application.

To enable the Body Corporate to be administered while this matter is being investigated and considered, I have also issued an interim order confirming the appointment of those persons appointed to the committee on 25 August 2004. However, my intention is that this interim committee will limit its decisions to the matters that must necessarily be addressed to ensure that the Body Corporate is administered in accordance with the legislation pending a final determination of this application.

I now intend to request the Commissioner to invite the Body Corporate to make further submissions about the application. As it is clearly a person affected by the matters in dispute, I also intend to request the Commissioner to invite Better Cooking and Coffees Pty Ltd to make a submission about the application prior to its final determination.

Following a period for the Applicant to reply to any submissions, I intend to promptly make a final determination of this application.

Number of Scheme:	31739
Name of Scheme:	Palm Beach North
Address of Scheme:	1444 Gold Coast Highway Palm Beach, Queensland

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

•	declaring that an extraordinary general meeting of the Body Corporate held on 12 July 2004 (the EGM) was invalid;
•	requiring the provision of information to owners regarding a proposed caretaking service contractor for the scheme;
•	authorising a further extraordinary general meeting of the Body Corporate; and
•	allowing the co-owners of Lot 21 to both be members of the committee for the Body Corporate.

•	declaring that the EGM was invalid; and
•	deferring the appointment of a caretaking service contractor for the scheme pending the provision of further information regarding the proposed caretaking service contractor to owners.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Palm Beach North [2004] QBCCMCmr 422 (1 September 2004)