Alexandra [2004] QBCCMCmr 65 (2 February 2004)

Number of Scheme:	14778
Name of Scheme:	Alexandra
Address of Scheme:	201 Wickham Terrace QLD BRISBANE 4000

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

Anne Narelle Minter, the owner of lot 6; Arnaldo da Silva and Miriam Prystupa, the co-owners of lot 7; Colin Frederick Glanford, a co-owner of lot 11; Frans Karel De Laat & Shirley Helen Margretta Foster, the co-owners of lots 16, 17, 47 & 48; Robert Wainwright, as a director of Wansted Pty Ltd, the owner of lot 70C;Greg McDermant as a director of Gillies Services Pty Ltd, the owner of lots 70D & 70E;and Brendan Francis O’Meally as trustee, a co-owner of lots 74, 75 & 76

I hereby order that the application for an order that no work commence on the building work under dispute until this dispute is resolved, is dismissed.

I further order that the application for an order that the Commissioner for Body Corporate order that the motions that were voted upon at the Alexandra extraordinary general meeting of 5 January 2004 be declared valid, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0043-2004

"Alexandra" CTS 14778

The applicants have sought an interim order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

Commissioner order that no work commence on the building work under dispute until this dispute is resolved.

The Commissioner for Body Corporate order that the motions that were voted upon at the Alexandra extraordinary general meeting of 5 January 2004 be declared valid.

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 applicants stated:

In a circular letter dated 15 January 2004 from the committee to all owners, (a copy of which was attached to the application), owners were advised that the commencement date of the toilet refurbishment was 24 January 2004. The application was received in the Commissioner’s office on 23 January 2004, and, under sections 247(1) & (2) of the Act, the Commissioner referred the application to me on 27 January 2004, being the next business day. Section 247(3) of the Act provides that "the referral may be made even though notice of the application has not been given or all persons entitled to make submissions about the application have not had an opportunity to make submissions."

The application required amendment in certain particulars, and the last of that material was received by facsimile on 29 January 2004. On 30 January 2004, one of the applicants, Mr de Laat, spoke with Ms Margaret Leet, a member of staff in the Commissioner’s office, and advised her that the refurbishment was now going to commence on 31 January 2004.

In the circumstances, I am satisfied that the nature of the application warrants consideration for a possible interim order.

The history of the toilet refurbishment is a lengthy one. The matter has been under consideration by owners in one form or another for over two years. On 28 July 2003, the body corporate resolved to refurbish the toilets. On 28 August 2003, two of the present applicants lodged an application (0575-2003) which sought an interim order preventing the application of the special levy authorised by the body corporate at the July meeting to cover the costs of the refurbishment. On 19 September 2003, I dismissed the application. In my reasons for decision, I made the following comments:

The applicants stated that they are seeking adjudication as to the appropriateness of charging a levy for works that were not subject to an open tender and that

The applicants expressed the view that the proposed refurbishment is unreasonable and inappropriate for the reasons stated above. The applicants also questioned the manner in which the extraordinary general meeting was conducted, citing possible defects in voting procedures in relation to proxies and the financial status of certain owners. In addition they stated that the minutes of the subject meeting were inaccurate.

The body corporate committee was invited to respond to the application. The secretary advised that a copy of the application had been forwarded to all members of the committee, and also to the building manager, Mr Tony Byrne.

The committee responded, and also attached amended minutes. In its submission, the committee explained the background to the refurbishment project, including the fact that it had been considered by the body corporate over a long period of time. The first meeting at which the subject was discussed was held on 20 November 2000, when it was decided that the committee might consult an architect. The next meeting at which the matter was discussed was the annual general meeting held on 26 November 2001. The committee pointed out that the refurbishment proposal was then considered by two architects, with particular emphasis on health issues and Workplace Health and Safety responsibilities. Two quotations were received, and, on the recommendation of one of the architects, one of those quotations was recommended by the committee to owners.

The committee stated that owners were given adequate notice of the proposal and were also given sufficient opportunity to inspect the proposals before casting their vote at the subject meeting.

In relation to the applicants’ complaint concerning proxies, the committee advised that proxies were accepted at the meeting, but after the meeting three were found to have been unfinancial, so their votes (which were "no" votes) were disallowed.

The committee maintained that the majority of owners want the refurbishment project to proceed.

Section 152(1)(a) of the Act provides that the body corporate must administer manage and control the common property and body corporate assets reasonably and for the benefit of lot owners. Section 109(1) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module), by which this scheme is regulated, provides that the body corporate must maintain common property in good condition. The material before me indicates that the toilets are not in good condition. The committee appears to have, quite properly, addressed this issue.

The body corporate has given owners ample opportunity to discuss the refurbishment proposal, which was first raised at the annual general meeting held in November 2000. The expenditure clearly exceeded the relevant limit for major spending, and in accordance with section 104 of the Standard Module, the body corporate obtained two quotations for the proposed works and afforded owners the opportunity to select the contractor to carry out the works by voting on the motion proposed at the extraordinary general meeting held on 28 July 2003. That motion, although not presented in the traditional way for alternative motions, did in fact achieve that result, as owners were able to vote for "Quadric" (the Quadric Pty Ltd quotation or proposal) or "Lyons" (the Lyons Projects quotation or proposal) or they could have abstained. The information regarding each contractor was available for viewing in the chairperson’s rooms during business hours on weekdays before the meeting. There is no requirement under the legislation for the body corporate to have gone out to "open tender". If owners were unhappy with the quotes obtained by the committee, they could have rejected both proposals.

In addition, because the refurbishment had not been budgeted for, the body corporate proposed a motion raising the necessary special levy, as required by section 95(2) of the Standard Module.

On the material before me, I am satisfied that the refurbishment does not fall into the category of an improvement, and that, therefore, a special resolution was not required. The toilets will undoubtedly be brought into a better or more desirable condition by the work proposed to be carried out. Thus, to that extent, they might be said to have been improved. However, the definition of "improvement" in Schedule 6 of the Act includes

The nature of this definition, in my view, indicates that the work contemplated to be carried out must effect more than a change which is merely aesthetically pleasing. Similarly, if there is some minor structural change to accommodate workplace health and safety issues or work required by Council (such as replacing the galvanised pipes with copper pipes) the work can still be properly categorised as refurbishment, not an improvement.

I do not propose to make the order sought by the applicants. I have dismissed the application in its entirety. This interim order is, therefore, also a final order.

The applicants were advised that aggrieved persons might appeal the order made on 19 September 2003 to a District Court, but only on a question of law, pursuant to sections 289 and 290 of the Act. The applicants did not lodge an appeal.

The circular letter dated 15 January 2004 advised owners that after application 0575-2003 was dismissed, the body corporate committee "proceeded to full documentation, specification of works, and signed contract documents on 3 November 2003." By that stage, the committee was entitled to implement a motion which had been properly carried at a general meeting, and in respect of which a dispute application had been dismissed.

The notices requesting an extraordinary general meeting were delivered to the secretary after the contract documents had been executed. It appears from the material obtained from the secretary in connection with this application, that the original notices were forwarded to the secretary by "R Wainwright" under cover of a letter dated 27 November 2003. It further appears that the body corporate committee then sought legal advice in respect of the notice, and the motions proposed for consideration at the requested meeting. Advice was provided by Mr Scott Gregory, a consultant to the firm of Dibbs Barker Gosling, Lawyers. A copy of Mr Gregory’s advice, dated 8 December 2003, was attached to the application.

Mr Gregory advised the committee that the body corporate was not able to rescind the resolution passed at the extraordinary general meeting held on 28 July 2003, as a valid contract had been entered into. Mr Gregory further advised that the person chairing the requested extraordinary general meeting must rule all of the proposed motions out of order, because the motions, if passed, would be unenforceable. Mr Gregory further advised that the chairperson was required to give his reasons for so ruling, and suggested that the chairperson might refer to Mr Gregory’s advice as encapsulating his reasons.

The Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) was amended with effect from 1 December 2003. Section 47 provides as follows:

motion out of order must be recorded in the minutes of the meeting.

It is evident from the material provided to me that the chairperson did not comply with section 47(2)(b), which had been inserted by the amendments which took effect from 1 December 2003. However, notwithstanding his ruling that the motions were out of order, the minutes reveal that the chairperson, "in consideration of the amount of interest shown in the matter, ...agreed that the votes should be counted as an indication to the committee members of the views of the lot holders."

This action effectively provided the outcome that section 47(3) of the Standard Module was designed to achieve, namely, that the votes cast, both by voting paper and by those present at the meeting, should be known. Therefore, although there was technical non-compliance insofar as owners were not advised of their rights, the meeting was not wasted, because at least all owners had the opportunity to have their votes recorded.

After disregarding votes which were cast by non-financial owners, the minutes reveal that each of the three motions attracted a greater number of "Yes" votes than "No" votes, and, having been proposed as ordinary resolutions, would under normal circumstances have been passed.

The task that I now have is to determine whether the motions should have been ruled out of order in the first place. I am of the view that the chairperson’s ruling was correct. As Mr Gregory pointed out in his advice, the body corporate has entered into a valid contract with a contractor to repair the toilets, and if the body corporate were now to repudiate that contract it would be liable to the contractor for damages for breach of contract.

Owners had the opportunity to vote against the toilet refurbishment on 28 July 2003. Certainly a number of owners did so, but their numbers were insufficient to defeat the motion. If some owners who did not vote at all at that time later decided that they should have done so, then that was their loss. Adequate opportunity was given for them to register a vote, and adequate material was available for them to consider the proposal. Similarly, if some owners who voted for the refurbishment later changed their minds, as has been alleged in this application, then that was also their loss. The motion relating to the refurbishment involved a significant sum of money. It would not be unreasonable to assume that owners invited to vote upon such a proposal would have given proper consideration to all relevant issues before casting their vote.

As in all such things, there must be a point in time at which a body corporate decision can be identified with certainty. On 28 July 2003 owners were given the choice of two contractors, as required, and one was selected. An application was made to effectively overturn that decision, and the application was dismissed. Those applicants were advised that they had a right of appeal against the dismissal, and they did not avail themselves of their appeal rights. That dismissal cleared the way for the committee to enter into a contract with the successful contractor. There was no reason that the matter should not have been advanced as it was. The committee had the authority to execute the contract for the refurbishment.

It is the experience of this office that in many bodies corporate there have been lingering complaints after a proposal involving the expenditure of significant sums of money has been passed. If body corporate committees were to wait until such complaints completely subsided before implementing properly authorised proposals, intolerable delays would occur, and the administration of body corporate business would be thrown into disarray. I consider that after the earlier application was dismissed, the committee proceeded in a timely fashion, but without undue haste. None of the parties has alleged that the contract into which the body corporate entered on 3 November 2003 was not valid and enforceable. For that reason, I find that the body corporate is not able to rescind the resolution previously passed, and therefore the motions considered on 5 January 2004 are unenforceable.

I have dismissed the application in its entirety.

It is not necessary for me to make a determination as to the relative merits of the competing proposals; however, I consider that some comment is warranted. The circular letter headed "Statement to Alexandra Lot Holders re Extraordinary General Meeting on 5 January 2004" forwarded to all owners with the meeting material made the following claim in paragraph 1:

"The refurbish option is now available and an estimate from a reputable maintenance firm for $70,000.00 to refurbish the toilets and make them comply with all Government standards is attached."

The document dated 10 December 2003 from MINC Services did not claim that the work outlined therein would comply with all Government standards. Furthermore, the estimate did not make any provision for the enlargement of those toilet spaces which had been identified in the Safety Wizard report dated 17 November 2003 as failing to comply with the dimensions required by the Workplace Amenities Advisory Standard 2000. As the sum of $70,000.00 was clearly identified as an estimate, one can only assume that if the contractor intended to comply with the legislative requirements for such matters, that there would be an additional sum involved for such work.

The Safety Wizard report advised the body corporate that an advisory standard or industry code of practice must be followed, or alternatively, that another way must be developed that can provide the same level of protection against the risk. In my view the MINC proposal, as it was presented, fell short of addressing these legislative issues.

a)	The building manager has indicated could be done for significantly less than the suggested price and had been budgeted for at the lesser amount
b)	Could be paid for progressively from available funds if it was decided that the disputed work was appropriate at the price submitted directly to the body corporate without an open tender process
c)	Could be done at the discretion of lot holders on each floor rather than on a building wide basis as the requirement and the degree of deterioration varies from floor to floor and the act allows this type of discretionary refurbishment. This is particularly applicable to a shower on level B that is rarely used.
d)	Appear to be directed at achieving a standard in the toilet areas that is entirely inconsistent with the quality of the rest of the building.

a)	the erection of a building; and
b)	a structural change; and
c)	a non-structural change, including, for example, the installation of air-conditioning

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Alexandra [2004] QBCCMCmr 65 (2 February 2004)