Crown Towers [2004] QBCCMCmr 88 (12 February 2004)

ORDER OF SPECIAL ADJUDICATOR

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme: 24386
Name of Scheme: Crown Towers
Address of Scheme: 5-19 Palm Avenue, Surfers Paradise 2417

Body Corporate: Crown Towers

TAKE NOTICE that pursuant to an application made under the above-mentioned Act by Castlegale Pty Limited (CAN 091 401 893)

BY CONSENT I HEREBY ORDER AND DECLARE that Resolutions 4,5 and 6 set out in the Agenda distributed by the Body Corporate with its notice of extraordinary general meeting for Friday 13^th February 2004 at 10am are each invalid and

I DO FURTHER ORDER AND DELCARE that Resolution 3 in the said agenda is invalid and

I DO FURTHER ORDER that the applicant and the respondent do each pay to me as costs the sum of $2,200.00

Signature: _____________________
Cedric Hampson

I hereby certify that the within photocopy is a true copy of the document of which it purports to be a copy.

Dated this day of February 2004 _______________________
Special Adjudicator

Statement of Reasons of Cedric Hampson Special Adjudicator for decision Application 58 of 2004

"Crown Towers" CTS 24396

The body corporate gave notice of a meeting to be held on Friday 13^th February 2004 at 10am by serving on its members "Notice of Extraordinary General Meeting" which is accompanied by a number of documents.
One accompanying document is an agenda for the meeting which sets out "motions – below for consideration" and records that a voting paper is to be found at the end of the Meeting Notice. The agenda sets out 8 resolutions each of which is described as "Ordinary Resolution".
Castlegale Pty Limited filed an application that the 8 resolutions were invalid. I was appointed, both by the Commissioner and by the consent of the parties, to be a special adjudicator to hear and determine the application in due time before the meeting. Wednesday 11^th February at 10am was fixed for the hearing and both parties duly attended by their legal representatives.
Mr Griffin QC and with him Mr C.J. Carrigan appeared for the applicant Castlegale Pty Limited and Mr John Faulkner appeared for the respondent body corporate. Counsel asked me to make a consent order declaring that Resolutions 4, 5 and 6 were invalid. Mr Faulkner said that if those consent orders were made then the three resolutions in question would be withdrawn. I was later told by counsel that the applicant was not pursuing its attack on Resolutions 8 and 9. This left the validity of Resolution 3 as the only matter in contention. I shall therefore make by consent the declaration sought about Resolutions 4, 5 and 6 but ignore Resolutions 8 and 9.
The Commission’s file was admitted into evidence as Exhibit 1, a copy of the amended application as Exhibit 2 and copy of the affidavit of Peter Wilford George as Exhibit 3; Mr George undertook to file the originals of Exhibit 2 and Exhibit 3 in the Commission’s office.
Each side produced written submissions. I marked the applicant’s written submission Exhibit 4 and those of the respondent Exhibit 5.
Resolution 3 is in the following terms:

I should record that the parties argeed that my appointment as special adjudicator had been properly made, that the application by the applicant raised a "dispute" within the meaning of Chapter 6 of the Act and that the applicant is a "caretaking service contractor" within Section 231. They said that as the meeting was so imminent I should proceed to determine the issue finally and ignore the earlier request for an interim order.
Both parties pressed me to determine the matter and publish my determination as soon as possible, and certainly before Friday 13^th February at 10am. I undertook to do so by shortening the expression of my written reasons to some extent.
The applicant’s argument was fundamentally twofold:-

Respondent’s counsel conceded that Section 312 applied and that a special resolution was required. However, he contended that Section 55 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 allowed the resolutions to be amended to take effect as a special resolution. He also relied on Section 50(5)(b) of the same regulation.
He defended the text of the resolution: it was not so vague as not to be a permissible resolution and, in any even, could be amended at the meeting to dispense with any infelicities of language. He submitted that, on its proper construction, Resolution 3 did not authorise the respondent to institute criminal proceedings itself and that the reference to "all persons.....involved in the unauthorised use.....of electricity" was not too wide but, if it was, it could lawfully be narrowed by amendment.
In my opinion Resolution 3 is not so wide or so vague and indefinite that it does not amount to a valid resolution. I therefore reject this argument of the respondent. For what it is worth, I should say that Section 55 of the Accommodation Module Regulation would allow, in my opinion, the amendment of the motion by narrowing its ambit provided that the amendment does not change the subject matter of Resolution 3. An amendment which widened the ambit of Resolution however could result in the amended Resolution falling outside the scope of the Resolution for which notice was given with consequent invalidity.
Section 312(1) prohibits the respondent from starting proceedings unless "the proceeding is authorised by special resolution". "Special resolution" means a resolution under Section 106, according to Schedule 6. Section 106(3) provides:

There is obviously differences between a special resolution under the Act and under the Corporations Law. Under the Corporation Law a special resolution means, in relation to a company, a resolution of which notice as set out in paragraph 249L(c) has been given and is passed by at least 75% of the votes cast by members entitled to vote on the resolution. Paragraph 249L(c) requires the notice to set out the intention to propose the resolution as a special resolution and to state the terms of the resolution. Statutory requirements of this kind are mandatory: see Santor J in St George Bank Ltd v Rangers Club of NSW (1995) 18 ACSR 370. The Court can however declare that defects do not invalidate steps taken which otherwise would be defection: See Section 1233(2). The abovementioned Act does not contain any corresponding provisions and a failure to comply with mandatory provisions of the legislation will be fatal.
The significant difference between ordinary and special resolutions under the Act is the higher vote required for a special resolution. But the Act allows resolutions without dissent (Section 105) and majority resolution (Section 107) to be included on the same voting paper as special and ordinary resolutions. This to my mind justifies treating the requirements of Section 40A(4)(b) of the Accommodation Module Regulation as mandatory and not merely as directory.
The voting paper distributed by the respondent appears at page 967 of Exhibit 3. Resolution 3 does not appear on the voting paper; only a précis of it appears. The voting paper does not mention "ordinary resolution" or "special resolution", so quite clearly Section 40A(4)(b) has not been complied with. Section 55 of the Accommodation Module Regulations allows the amendment of voting papers prepared pursuant to Section 40A(4)(b) and served on lot owners pursuant to Section 40(1) and Section 40(3)(c). As the legislation does not contain any provision under which failure to comply with a mandatory provision may be excused the result in my opinion is that the meeting called to consider Resolution 3 has not been lawfully called and that Resolution 3 cannot validly be considered on Friday 13^th February at 10am.

The main thrust of the argument on behalf of the applicant is that the notice of meeting described Resolution 3 as an ordinary resolution when it was necessarily a special resolution; and, in the absence of any statutory power to amend the notice, Resolution 3 cannot lawfully be put before the meeting. A power to amend the motion is not enough: a power to amend the notice is essential but it is lacking. Accordingly all the respondent can do is call a fresh meeting.
I believe this argument is correct. Accordingly Resolution 3 is bad first because the voting paper does not comply with the legislation and secondly because the notice has wrongly described the class of motion that Resolution 3 must be.
It follows in my opinion that an attempt to create a special resolution at the meeting by having Resolution 3 passed by the vote required for a special resolution would be nugatory.
I am prepared to order that Resolution 3 is invalid because of non-compliance with the legislation.
Counsel for the applicant has invited me to make a special order about costs because the late withdrawal by the respondent of its defence of Resolution 4, 5 and 6 meant the applicant enjoyed considerable success. The respondent ‘s counsel countered by pointing out that the applicant had not made a submission against Resolutions 7 and 8. He also complained of late service by the applicant of material, though the proper remedy for this was an adjournment and he was given an adjournment long enough to recover from any disadvantage caused by the late service.
Section 280(2) provides " unless the adjudicator otherwise orders, the applicant is responsible for the costs of the application." I was told by the counsel for both parties that this provision is generally accepted as referring to the costs of the specialist adjudicator. I am surprised at this interpretation for it would have been simple for the Legislature to have to have said "costs of the adjudicator" if this is what intended. Additionally, it is not consistent with the power given under Section 270 to award costs, admittedly limited to $2,000, against an applicant. However, I am content to treat my power to award costs as limited as described by the parties.
Costs are payable by the applicant unless I make a special order. That the Act makes the costs generally payable by the applicant militates against adoption of the simple proposition that costs should follow the event. Unless a special order can be obtained the applicant must pay the costs, even if the applicant wins. It was not suggested that the respondent has been guilty of any conduct that would justify a special order against it. The applicant’s sole argument for a special order is that it succeeded; wholly succeeded, as it now turns out. I think this argument is entitled to some weight but it does not displace entirely the general rule that the applicant should pay the costs. I think that the applicant and the respondent should each pay half my costs. I therefore order that the applicant pay to me half of my notified daily rate and that the respondent pay to me half of my notified daily rate; that is $2,200 each.

Dated this twelfth day of February 2004

1.	Resolution 3 cannot be a special resolution, even if approved by a 75% vote as is required by Section 312 of the Act, because it has been circularised as an ordinary resolution.
2.	The language of the motion is so vague and indefinite as not to amount to a proper resolution; the resolution should therefore has declared to be one which does not simply with the Act.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Crown Towers [2004] QBCCMCmr 88 (12 February 2004)