Torelliana [2004] QBCCMCmr 629 (8 December 2004)

Number of Scheme:	22061
Name of Scheme:	Torelliana
Address of Scheme:	170 Bardon Avenue MIAMI Q 4220

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Michael STOCKDALE and Maureen STOCKDALE, the owners of Lot 15

I hereby order that the application for the following orders:

1. The Body Corporate shall be required to refund its Administration Fund surplus.
2. The Body Corporate’s financial administrator Miami Recreational Facilities P/L shall be required to provide details of its Sinking Fund.
3. The Body Corporate shall be required to provide a complete list of all motions submitted prior to the AGM.
4. The Body Corporate shall be required to provide full details of all office bearer applications submitted on or before 30.6.04.

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0529-2004

"Torelliana" CTS 22061

This application is by Michael and Maureen Stockdale, the owners of Lot 15 (applicants) seeking an order against the body corporate (respondent). The applicants are seeking the following orders:

JURISDICTION

"Torelliana" Community Titles Scheme 22061 is a 30 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). The scheme is part of the "Miami Retirement Village" complex which consists of seven individual schemes, and land owned and managed by Miami Recreational Facilities Pty Limited (MRF). The seven schemes are not part of a layered arrangement of community titles schemes under the Act, but individually have a relationship with MRF, a public company which is not subject to the Act.

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:

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)).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate secretary for distribution to the owner of each lot (excluding the applicant) and the committee. A submission was received from the committee. The applicants replied to this submission.

FACTS AND DETERMINATION FOR EACH ORDER SOUGHT

The Body Corporate shall be required to refund its Administration Fund surplus.
The applicant’s main submissions were to the effect that even though the body corporate’s administration fund is operating at an end of financial year surplus, the body corporate contributions increase. The applicants consider that the levy increases can affect owners economically, and the surplus for the year ending 30 June 2004 was not refunded back to the owners.

The body corporate’s main submissions were to the effect that a surplus is maintained in the administration fund to accommodate the quarterly payment to MRF. It is submitted that the contributions for scheme expenses did not increase in 2004, and that the levy increase was due to the increase in expenses required by MRF.

The applicant’s reply to submissions was to the effect that the administration fund contribution has increased as evidenced by two invoices dated 5 June 2003 and 5 September 2003.

The applicants have sought a refund of the surplus money in the administrative fund, but it is implied in their grounds that the applicants consider that the body corporate contributions should be reduced by the amount of the surplus. While the legislation does not make provision for administrative fund surplus to be refunded back to lot owners, an adjudicator may, if satisfied that the amount of a contribution is unreasonable, order that the contribution be reduced to a reasonable amount. However, the applicants have not stated the amount of the surplus to be offset against current contributions and how that amount is to be apportioned between the lot owners given that the contribution lot entitlements for the scheme vary from 3 to 7. Therefore, it can only be concluded that the applicants seek an order as stated, and in the absence of a legislative right for a refund of the surplus end of financial year monies, this order sought is dismissed.

If the applicants had sought a specified reduction in contributions, the following factors would have been taken into consideration:

For these reasons, I do not consider that the body corporate is acting unreasonably in maintaining a fund surplus for the specific purpose of covering its MRF obligations.

The Body Corporate’s financial administrator Miami Recreational Facilities P/L shall be required to provide details of its Sinking Fund.
The applicant’s main submissions were to the effect that there are several bodies corporate in the Miami Village precinct with a total of 134 units. The bodies corporate contribute funds to MRF which is managed by an executive consisting of a representative from each body corporate. The lot owners within each scheme do not have the right to vote or to submit motions for the consideration of MRF. Democratically, there should be a clearly defined scheme where everyone should benefit and participate.

The body corporate submitted that MRF are a company and not part of the body corporate. A letter from the chairperson of MRF details the relationship and included a copy of an agreement between the body corporate and MRF. This agreement provides for the determination of levies and the obligation of the individual bodies corporate to contribute to levies struck to cover maintenance costs.

MRF is a registered public company and is not subject to the provisions of the Act. Therefore, the administration of MRF is outside the jurisdiction of the Act. For this reason, this order is dismissed.

The Body Corporate shall be required to provide a complete list of all motions submitted prior to the AGM.
The applicant’s main submissions were to the effect that two motions were submitted to the body corporate before the end of the financial year for consideration at the annual general meeting. The applicants were informed by the chairperson on 9 July 2004 that the motions did not have any bearing on the common property. The applicants contend that the motions should have been included on the agenda of the AGM.

The body corporate’s main submissions were to the effect that the motions relate to operations under the control of MRF and are beyond the body corporate’s jurisdiction.

The applicant’s reply to submissions were to the effect that had the motions been included on the agenda of the annual general meeting and passed, the decisions may have had more impact on MRF than a letter from them as a lot owner.

Section 41 of the Standard Module provides a right for a lot owner to submit a motion to a general meeting. Section 41(3) requires a motion for an annual general meeting to be given to the secretary before the end of the financial year. Section 45(2)(a)(iii) provides that the agenda for a general meeting must include the substance of a motion submitted under section 41 and required to be included in the agenda.

While section 47 of the Standard Module provides a power for a person chairing a general meeting to rule a motion out of order, the above provisions of the Standard Module require a properly submitted motion to be included on the agenda of a general meeting. Therefore, the motions submitted by the applicants before the end of the financial year should have been included on the agenda of the annual general meeting. The applicants were also entitled to include an explanatory note with each motion of not longer than 300 words under section 42C(1) of the Standard Module.

While there may have been concerns about the motions, neither the body corporate secretary nor the committee had the right to exclude the motions from the agenda of the annual general meeting. The power lies with the person chairing a general meeting under section 47 to rule a motion on the agenda out of order.

The committee have submitted that the motions relate to MRF operations, and it would seem that the second motion relates to both MRF land and land of other schemes in the Village. The committee is correct to the extent that the "Torelliana" scheme cannot make a decision requiring the maintenance or otherwise of land outside its scheme or jurisdiction. While the applicants motions should have been included on the agenda, there is a distinct possibility that both motions would have been properly ruled out of order at the annual general meeting on the basis that each motion would have been unenforceable as the motions relate to other community titles schemes and other land outside the jurisdiction of the "Torelliana" body corporate. For this reason, I have not ordered that the body corporate convene another meeting to deal with these matters and this order sought is dismissed.

However, it would appear that the applicants’ motive was to have matters brought to the attention of MRF and other bodies corporate through a "Torelliana" body corporate decision. Given that each separate body corporate in the Village has a relationship due to their association with MRF, it is reasonable for a lot owner to submit a motion seeking a decision that their body corporate give a notification to another entity such as MRF or another body corporate about a particular issue. I would suggest that the applicants need to consider the intention and wording of such a motion. For example, a motion could relate to the "Torelliana" body corporate requesting another entity (such as MRF) to consider the maintenance of a certain part of MRF land. A similar motion with appropriate wording was submitted to the annual general meeting by the committee and shown on the agenda as motion 5. Such a motion provides an opportunity for the body corporate to place a matter before MRF for its consideration. Obviously, if the body corporate does make a decision relating to MRF or another scheme, it is then for MRF or the other scheme to determine whether the matter is progressed.

The Body Corporate shall be required to provide full details of all office bearer applications submitted on or before 30.6.04.
The applicant’s main submissions were to the effect that they made a nomination for election to the positions of chairperson, secretary and committee member before the end of the financial year. They believe that owners were approached after the end of the financial year to nominate for committee positions. The committee appointed an owner as a returning officer in contravention of the legislation. The applicants also state that ten owners were present at the annual general meeting and 1 owner gave a proxy to the chairperson. However, 13 votes were recorded for motions, 21 owners submitted ballot papers and all ballot papers were shredded after the meeting.

The body corporate’s responded by including a copy of each nomination for the committee submitted to the body corporate by the end of the financial year. The body corporate submitted that it has been the policy for 24 years that a returning officer is appointed for each annual general meeting and that the ballot papers are destroyed after each election. The body corporate submit that the appointed returning officer has no affiliation with the body corporate.

The applicant’s replied to submissions by stating that they should be entitled to question procedures which may not comply with the legislation. They state that the appointed returning officer was the chairperson of MRF, and that no motion was put forward to shred documents.

While the applicant seeks an order to obtain details of nominations, in a telephone conversation with Frank Hemeter from this office on 20 October 2004, Mrs Stockdale stated that her intention was to invalidate the election of committee members at the annual general meeting. While the order sought and the stated intention relate to the election of the committee, these are two very distinct issues. The order sought simply seeks information about the nominations for committee positions, yet the invalidation of the committee election is a significant issue affecting the management of the body corporate. The application was not amended to reflect this alteration and the body corporate has not had the opportunity to respond to such a claim. I cannot accept this amendment as neither the body corporate nor lot owners were aware that this is the outcome which was being sought by the applicants.

Therefore, this decision is based on the order sought that the applicants be provided with details of the nominations submitted before the end of the financial year. The committee included the nomination forms with its submission to the application. As the applicants have received a copy of these documents under section 246 of the Act before responding to the committee’s submission, and there is no reason to suggest that these nominations were made after the end of the financial year or that other nominations were made after the end of the financial year, I consider this matter has been satisfied. For this reason, this order sought is dismissed.

Therefore, each of the orders sought have been dismissed. However, in making these decisions I am concerned about the following procedures adopted by the body corporate for the annual general meeting.

Firstly, it is evident based on the copy of the nomination forms provided by the committee that the nomination procedure was flawed. Section 13(2) of the Standard Module provides:

"The secretary must serve a notice on each lot owner shown on the body corporate’s roll, inviting each lot owner--

(ii) another individual who is a lot owner or who may be nominated by the lot owner in accordance with section 10(1)(b)(i); or

(b) if the lot owner is not an individual--to nominate an individual who is a lot owner or who may be nominated by the lot owner in accordance with section 10(1)(b)(ii) or (iii)."

This provision was amended on 1 December 2003 with many other significant amendments to the Standard Module. The basis of the amendment to section 13(2) is stated in the Explanatory Notes to the amendments as:

Clause 131--This clause provides in section 13(2) that a lot owner may, in response to a notice inviting nominations for election of the committee, nominate only one individual (my highlighting). If the nominating owner is an individual, the individual nominated could be the owner themselves, another lot owner, or a member of the owner’s family or a person acting under a power of attorney given by the owner. If the owner is a corporation, the owner may nominate one individual who is a director, secretary or other nominee of the corporation. If the lot owner is a body corporate for a subsidiary scheme in a layered arrangement of community titles schemes, the owner may nominate a representative of the subsidiary scheme. This amendment, and the amendment in clause 128, limits the possibility of a committee being stacked by owners nominating multiple other people for election to the committee. The amendment does not restrict an owner from nominating the individual for more than one committee position."

It is clear that the owners Taite, Harris, Grant and Maher nominated more than one individual for election to various positions on the committee in contravention of the amended section 13(2). Such a defect is a reasonable ground for invalidating a committee election. However, I will not make such an order for the following reasons:

However, the body corporate should ensure that future committee elections are conducted in accordance with the amended provisions of the Standard Module.

Secondly, the body corporate decided at the annual general meeting to shred the ballot-papers. The body corporate cannot make this decision. Sections 148 and 149 of the Standard Module make provision for the keeping and disposal of body corporate records. Completed ballot-papers are "associated general meeting material" under section 148. Section 149(4) provides that this material may only be disposed of 2 years after their creation or receipt. Therefore, the practice of deciding to destroy the ballot-papers at or immediately after an annual general meeting must cease.

In relation to the returning officer, section 54 of the Standard Module provides for a person’s appointment and functions. While section 54(1) refers to a compulsory appointment where a motion is to be decided by secret ballot, section 54(2) provides for an appointment for any other general meeting. Therefore, the body corporate can appoint a person as a returning officer, otherwise then for a motion requiring a secret ballot. There is no indication that the person appointed for the annual general meeting is not eligible under section 54(4).

(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.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Torelliana [2004] QBCCMCmr 629 (8 December 2004)