Centre Court [2004] QBCCMCmr 86 (12 February 2004)

Number of Scheme:	12171
Name of Scheme:	Centre Court
Address of Scheme:	32 - 34 Musgrave Street KIRRA QLD 4225

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Donald James BEARD and Yvonne Annette BEARD, as the co-owners of Lot 25,

I hereby order that –

(a) the annual general meeting held on 28 November 2003 is void and the body corporate must convene a further general meeting of the body corporate as soon as possible to be deemed to be the annual general meeting; and

(b) the body corporate committee comprises those persons who were members of the previous committee, provided they are currently eligible to be an executive or ordinary member of the committee as the case may be.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0777-2003

"Centre Court" CTS 12171

The applicant has also made application for the following interim order of an adjudicator –

JURISDICTION:
This is a dispute between an owner (the applicants Beard) and the body corporate (the respondent), concerning the validity of an annual general meeting. This is a matter falling within the disputes resolution provisions of the legislation (see sections 227(1)(b), 228(1) and 276 of the Act).

While section 279(1) of the Act provides that an adjudicator may make an interim order if satisfied on reasonable grounds that an interim order is warranted because of the nature or urgency of the circumstances, there is nothing in the legislation to prevent an adjudicator, in appropriate circumstances, from making a final determination of the dispute by proceeding directly to a final order.

I consider this course is appropriate in this instance because: the facts of the matter are relatively simple and clear; the relevant parties (see later under heading "Application and Submissions" following) have been given the opportunity to respond to the disputed matter; sufficient information is available to determine the matter; and, in particular, a prompt resolution of the dispute is in the interests of all owners.

Accordingly, this order will be the only order made in respect of the application. The parties, of course, retain their appeal rights against the order made, and my having dispensed with the making of an interim order does not diminish those rights.

General powers of an Adjudicator in making an order:
Section 276(1) 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) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1) of the Act).

APPLICATION AND SUBMISSIONS:
In accordance with section 243 of the Act, a copy of the application was provided to the respondent body corporate (committee), the Body Corporate Manager purported to have been engaged by resolution of the meeting, Strata Title Management (Tweed Heads) Pty Ltd (hereafter "STM"), and to all other lot owners, with an invitation to each to respond in writing to the matter of dispute raised in the application.

Submissions were lodged by the following: Garcia of Lot 7; W Forsyth of Lot 12; L Gollop-Finn & J Ryniker of Lot 13; B & D Easton of Lot 19; Jack of Lot 23; G & G Wigg of Lot 26; and R & K Rutter of Lot 29. Four of the submissions were in favour of the application and three opposed it.

No submissions were lodged by either the respondent body corporate (committee) or STM.

By failing to respond to the application the committee loses the opportunity to rebut the allegations made by the applicants concerning the conduct of the meeting. Also, because of the prominent part it played in the convening and conduct of the meeting, it was in the interests of STM to make a response both as to its conduct and, as the purported Body Corporate Manager, in respect of whatever advice it may have given to the body corporate.

The relevant facts of the dispute concern the convening and conduct of the meeting and are better disclosed in conjunction with the determination of the particular point the facts relate to.

DETERMINATION:
"Centre Court" was registered as a building units plan (now termed a building format plan) in 1978 and comprises 30 lots. It is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module").

The breaches of the legislation alleged by the applicants are as follows. As the meeting was held on 28 November before major amendments to the Standard Module took effect on 1 December 2003, I shall refer to the law as it stood at the time but in the present tense.

Firstly, the principal of the body corporate management company STM, Raymond Jones, assumed the chair for the annual general meeting without seeking the approval of the voters present.

Section 46 of the Standard Module provides that where the elected chairperson is absent from a meeting then those persons present and having the right to vote must elect a consenting chairperson. Subsection (3) specifically provides that a Body Corporate Manager with the delegated powers of chairperson must not chair a meeting unless elected by those present (except in particular circumstances at an adjourned meeting which is not the case here. This provision is unnecessary except to emphasise that Body Corporate Managers have no right to exercise their delegated power except where the chairperson is absent and then with the express consent of the meeting.

The applicants, supported by four owners in their submissions, say that no vote of consent was given to Jones by the meeting. In one submission opposing the application, the Rutters say, "Mr R Jones , the General Manager of Strata Title Management, was asked by the... committee to chair the AGM...At the commencement of the meeting, Mr Jones introduced himself and announced that he would be chairing the meeting in the absence of Mr Hawton (The minutes incorrectly refer to Mr Kemp as our chairman) No person at the meeting raised any objection to Mr Jones being in the chair." This statement, though supporting Jones generally, confirms that Jones merely assumed the chair without complying with section 46.

Further, the minutes compiled by STM state opposite the heading "Chairman" the words –

This comment is wrong in two ways, (a) at the outset of the meeting STM held no engagement with the body corporate and therefore had no "delegated authority", and (b) invoking the delegation of the powers of chairperson is in direct conflict with the procedure emphasised by section 46(3) referred to above. Such a comment and action was not unusual in the past but the practice of a Body Corporate Manager chairing a meeting as of right was legislated against near 7 years ago. STM should note this in respect of other bodies corporate it manages.

Secondly, the applicants (see their point 8) and others say that the chairperson (Jones) did not inform the meeting of the vote count for each motion put. Again, in their submission the Rutters say in respect of this allegation that, "Mr Jones, as Chairman, told the meeting after each motion, whether the motion under discussion had been passed, or lost, without providing the voting numbers. When questioned about this practice, he said that the actual voting numbers would appear in the minutes."

I accept from the evidence, including the Rutters opposing the application, that a vote count was not declared in respect of each motion put. This is conflict with the provisions of section 56 of the Standard Module which states –

Clearly, the votes for and against a motion, and those who abstained, must be declared to the meeting. This is nothing peculiar to the legislation but common practice for meetings of all kind. It has been part of the new legislation since July 1997 and remains unchanged in the 1 December amendments. I am more than surprised that a professional Body Corporate Manager either does not know such a basic procedure or, at least on this occasion, ignored it.

The purpose of this requirement is at the heart of a meeting’s integrity; its immediate disclosure provides an opportunity for those present to verify, either accurately or roughly depending on the numbers and circumstances, the vote for themselves. It is no accident that this provision follows the requirement under section 55 for the body corporate roll, a list of persons having the right to vote at the meeting, and all proxy forms and voting papers, to be available for inspection by voters at the meeting.
Both the availability of the names those eligible to vote (eg excluding unfinancial owners for certain motions), proxy forms and voting papers, coupled with the declaration of the vote on a motion, allow a check to be made.

Thirdly, the applicants claim that voting papers for Lots 6, 7 and 25 are not recorded in the minutes. Certainly these are not included in the "Postal Votes" list, but whether they were included in the vote, assuming they were eligible to vote, cannot be known from the minutes which do not show the vote count – presumably a Voting-Tally Sheet was used and the vote is recorded there as the alternative to recording in the minutes (see section 56(3) of the Standard Module). Had either the committee or STM responded they may have been able to explain the absence of the 3 voting papers in the minute list. They should have been listed even if later rejected. Viewing this error in conjunction with the previous failure to declare the vote count for motions, raises doubt as to the accuracy of the vote.

Fourthly, the applicants claim that despite there being no nomination for the positions of secretary and treasurer, there wasn’t any invitation by chairperson Jones for nominations from the floor of the meeting. Again, the Rutters (who were the only one of the three opposing the application that addressed the substantial issues raised in the application) says in respect of this, "Our recollection is that the chairman called for nominations from the floor for the positions of both Secretary, and Treasurer, and none were forthcoming".

What the legislation requires in these circumstances is set out in section 21(2) of the Standard Module. It requires the chairperson to call for nominations from the floor and for those nominating to be elected by ballot of those persons present and able to vote. The legislation requires each body corporate to have a chairperson, secretary and treasurer.

The applicant’s (and other’s) recollection is that no call was made for nominations for either position; Rutter’s is that a call was made but none nominated. However, in contrast to both statements, the minutes show that Roderick Gibb was chosen for both positions, as well as chairperson. As neither the committee, STM or Gibb has made a response to the application (and it would have been helpful for Gibb to have given his evidence on the point), it appears at least that the proceedings at the meeting were not clear and obvious to those present. Whether Gibb validly holds the positions of secretary and treasurer is in doubt.

Fifthly, I note that the notice of meeting was signed by Jones as General Manager, Strata Title Management. Apart from the fact that STM had engagement with the body corporate at that time, the legislation is specific as to who is empowered to call meetings.

Section 40 of the Standard Module provides that a meeting may only be called by the secretary, another committee member authorised to do so by the committee, or a person required to call a meeting by order of an adjudicator. Mr Jones has no such capacity at the time and should not have signed the notice of meeting. Again, this is a basic procedural point that should be well known by him and STM.

Sixthly, I note from the minutes that only one quotation, by Andersens for the sum of $6,385, was put to the meeting in conflict with the requirements for major spending under section 104 of the Standard Module. As the replacement of multiple level carpeting must be regarded as a single project under section 103(2) of the Standard Module, and the cost exceeds the threshold for major spending ($200 times 30 lots = $6,000 for "Centre Point"- see Dictionary Schedule), there should have been at least two competitive quotes put to owners for their choice. Apart from being a legislative requirement, this is normal prudent commercial practice reflecting a common sense approach to spending moneys over a certain limit. It is also a protection for the committee against unfair accusations of favouritism.
I would point out that since the new amendments on 1 December 2003, the threshold multiple has been increased and is now $250 times the number of lots (ie $7,500) so when the matter is put again it will not need a competitive quote under the legislation. However, that does not mean owners should not be given a choice and the committee may, regardless of the value now not exceeding the threshold, choose to put at least another quotation to owners.

Seventhly, the applicant and others have complained of motions being improperly ruled out of order by the chairperson. I am not going to review each of the decisions as these matters can be put again by the proposer of the motions with additional information as necessary. Also, I am not in possession of all the facts, for example, in regard to the Roof Area motion, why isn’t the roof area now used by owners? Is it the subject of an exclusive use by-law?. Why would it be only used by a minority of owners? What "variance to the use of common property" requires a special resolution?

In summary, while it is always preferable to preserve a meeting despite various lapses in matters of procedure, in this instance the convening and conduct of the meeting include multiple errors including those that bear directly on the integrity of the voting and committee composition. It is my view that the meeting therefore must be taken as being void for irregularity and a further annual general meeting held (see section 7 of Schedule 5 of the Act).

I realise that this will be an inconvenience to some owners and that most motions at the last November meeting appear to have been passed with a sizeable majority, however it is important that the integrity of the voting and committee system is, and is seen to be, in compliance with the relevant legislative provisions.

I have also included as an order the consequence invalidation of the meeting has on the committee under section 25(1) of the Standard Module, which is that the previous committee resumes office.

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 this Act or the community management statement; or
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

Centre Court [2004] QBCCMCmr 86 (12 February 2004)