Tobermory [2005] QBCCMCmr 12 (11 January 2005)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by
the Body Corporate for Tobermory community titles scheme 15022:

I hereby order that within 7 days of the date of this order, the Body Corporate Secretary shall provide a copy of this order, and the accompanying statement of reasons, to the owners of each lot included in the scheme.

I further order that within 3 months of the date of this order, the Body Corporate shall convene and hold an extraordinary general meeting (the meeting) for the purposes of deciding whether to engage a body corporate manager for the scheme, and as necessary, for deciding between alternative body corporate managers.

I further order that:

1. The notice of the meeting shall not be distributed to owners until at least 21 days after the date of this order.
2. Owners may submit motions for consideration at the meeting (including motions proposing the engagement of a body corporate manager), and provided that those motions are received by the Secretary within 21 days of the date of this order then those motions shall be included on the agenda for the meeting.

I further order that the Body Corporate shall comply with section 42B of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module), including section 42B(4)(b), in respect of any motions with alternatives being considered by the Body Corporate at the meeting.

I further order that except as provided by this order, the meeting shall be called and held in accordance with the Body Corporate and Community Management Act 1997 and the Standard Module.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0352-2004

"Tobermory" CTS 15022

The Body Corporate for "Tobermory" has made a dispute resolution application to the Commissioner for Body Corporate and Community Management under the Body Corporate and Community Management Act 1997 (the Act).

The Body Corporate states that it is seeking the following outcome from the application:

Department of Natural Resources, Mines and Energy records show that the "Tobermory" community titles scheme was originally created under a building units plan of subdivision (now known as a building format plan) registered on 20 December 1965. The scheme land for "Tobermory" consists of 6 lots and common property.

A standard community management statement was recorded for "Tobermory" on 15 July 2000. The community management statement shows that the Act’s Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) applies to the scheme.

The Commissioner received this application on 2 June 2004. Originally, the Body Corporate sought the above outcome on both an interim and final basis. On 4 June 2004, the Commissioner wrote to the Body Corporate and advised that the application was not suitable for referral to an adjudicator for consideration for an interim order.

On 1 July 2004, the Commissioner issued the Respondent to the application (Mr Neil Dixon, a representative of the owners of a number of lots included in the scheme) with formal notice of the application. The Commissioner also invited Mr Dixon, the Body Corporate Manager for the scheme, and all owners of a lot included in the scheme to make written submissions about the application. I have before me submissions about the application from Mr Neil Dixon and Mrs Linda Dixon on behalf of Hepron Pty Ltd and Palcourt Pty Ltd the registered owners of Lots 1 and 6). Mr Dixon and Mrs Dixon have also responded to the application on behalf of Ms Gwen Dixon (the registered owner of Lot 4). I also have before me a submission made on behalf of Mrs Enid Young (the registered owner of Lot 3).

In accordance with section 246 of the Act, the Commissioner has provided a copy of the submissions to the Body Corporate, via the Body Corporate Secretary who is currently Mr Niall Marshall of body corporate managers Body Corporate Administration (BCA). Mr Marshall has provided a written response to the submissions by facsimile of 8 September 2004.

On 15 September 2004, the Commissioner made a dispute resolution recommendation that the application should be resolved by departmental adjudication. The Commissioner subsequently referred the application to me for consideration.

This dispute resolution application concerns an extraordinary general meeting of the Body Corporate held on 27 April 2004 (the EGM). More particularly, the application concerns a motion considered by the Body Corporate at that meeting proposing that the Body Corporate engage a body corporate manager to provide administrative services to the scheme (Motion 2).

The notice and minutes of the EGM show that motion 2 was presented to owners as a "motion with alternatives". Firstly, the minutes show that the broad proposal to appoint a body corporate manager was carried at the meeting with 6 votes in favour of the motion and 0 votes against the motion.

The notice of the EGM shows that the second part of the motion provided owners with a choice of three alternative body corporate managers, BCA (alternative 1), Australian Unit Administrators (alternative 2) and Body Corporate Choice (alternative 3). The minutes of the meeting show that this second part of the motion resulted in a tied vote with 3 votes cast in favour of engaging BCA and 3 votes cast in favour of engaging Body Corporate Choice. No votes were cast in favour of engaging Australian Unit Administrators.

The minutes also show that Mr Marshall of BCA explained to the meeting that in the event of two or more alternatives receiving an equal highest number of votes, the legislation required that the matter be determined by chance in a way decided by the meeting, such as by the toss of a coin.

The minutes of the EGM record that Mr Dixon objected to the selection of a body corporate manager being decided by chance and considered that the matter should be referred to this Office. The minutes state that all other participants in the meeting agreed to this course of action. It is also evident from the minutes that there was some disagreement at the meeting regarding whether or not Mr Dixon was entitled to exercise a number of proxies for voting on motions before the meeting. These two matters form the basis of this dispute resolution application.

Section 227(1) of the Act limits the disputes that may be resolved under the Act’s dispute resolution provisions to those between particular combinations of parties involved in community titles schemes. However, section 227(2) provides that an application by a person mentioned in section 227(1)(a) to (h) for a declaratory order about the operation of the Act is also a "dispute" for the purposes of the Act’s dispute resolution provisions.

In a broad sense, this application describes a dispute between the body corporate for a community titles scheme and the owners of lots included in the scheme. Therefore, the matter is a "dispute" within the meaning of section 227(1)(b). However, it is probably more accurate to say that the application is one made by a body corporate seeking a declaratory order about the operation of the Act as contemplated by section 227(2).

Section 276(1) of the Act allows adjudicators to make just and equitable orders (including declaratory orders) about a wide range of matters, including claimed or anticipated contraventions of the Act and the exercise of rights or powers under the Act. This application seeks direction on provisions of the legislation regulating the use of proxies at general meetings as well as provisions for deciding motions with alternatives that are considered by a body corporate at a general meeting.

For these reasons, the matter is one that falls within the jurisdiction of an adjudicator.

The Standard Module was the subject of a number of significant amendments which commenced on 1 December 2003. Among other things, these amendments introduced the concept of "motions with alternatives" to the legislation.

In many instances, bodies corporate are presented with a number of motions which propose alternative ways of dealing with the same issue or subject matter. A common example of such a situation is where a committee (and perhaps individual owners) submit a number of motions proposing that particular body corporate managers be engaged to provide administrative services to the scheme. It is then for owners to choose between the alternatives at the relevant general meeting.

Following amendments to the Standard Module that took effect from 1 December 2003, if two or more motions proposing alternative ways of dealing with the same issue are submitted for consideration at a general meeting of a body corporate, then the committee must present those motions on the voting paper for the general meeting as a single "motion with alternatives". The relevant explanatory notes explain that the purpose of this approach is to "avoid the agenda being manipulated by placing a motion that is favoured by the committee first on the agenda, and if that motion is passed, the subsequent motions dealing with that subject will not be voted on" ^[1].

The Standard Module includes the following specific provision regarding motions with alternatives:

(a) list as alternatives under 1 motion submitted by the committee (a "motion with alternatives"), the substance of each of the original motions; and

(b) show, after the motion and each alternative listed under it, a blank space for voting purposes.

(a) for the motion, by voting for the motion and for 1 of the alternatives listed under the motion; or

(a) the alternative with the most votes is the body corporate’s decision; or

(b) if 2 or more alternatives (the "qualifying alternatives") receive an equal highest number of votes--the qualifying alternative that is the body corporate’s decision must be decided by chance in the way the meeting decides.

In this case, the voting paper for the EGM correctly presented three alternative choices for a body corporate manager in the form of a single "motion with alternatives". As mentioned previously, at the meeting alternative 1 (BCA) and alternative 3 (Body Corporate Choice) purportedly received an equal number of votes (albeit that the ability of Mr Dixon to exercise proxies to vote on the motion is a matter in some dispute).

Subsection (4)(b) of the section 42B (above) clearly provides that if 2 or more alternatives receive an equal highest number of votes, then the decision between the alternatives must be decided by chance in the way the meeting decides. Therefore, in my opinion, Mr Marshall’s advice to the body corporate regarding determining an outcome for motion 2 was entirely correct.

Mr and Mrs Dixon argue that a "toss of a coin" is an inappropriate way to make decisions of this nature. It is not appropriate or necessary for me to assess whether there is any merit in this argument. Suffice it to say that by including section 42B(4)(b), the legislature has decided that it is acceptable for the outcome of a tied vote on alternative ways of dealing with the same subject matter to be finally decided by chance, in a way decided by the meeting.

In their submission, Mr Dixon and Mrs Dixon also raise a range of concerns about the proposed terms of engagement of BCA. I do not intend to consider these issues in the context of this application. This application simply seeks direction on deciding the outcome of a motion with alternatives where two alternatives receive an equal number of highest votes. The concerns expressed in Mr Dixon and Mrs Dixon’s submission about the terms of the agreement are matters that, at least in the first instance, they should present for the consideration of owners in deciding which body corporate manager to vote for. It is not the role of an adjudicator to decide which proposed body corporate manager is preferable, rather that is a matter for owners to decide. In my opinion, an adjudicator should not interfere in the ability of a body corporate to make its own decision, by majority, about body corporate management unless there has been some clear contravention of the legislation in the process of engaging the body corporate manager.

The Body Corporate should have decided between BCA and Body Corporate Choice at the EGM by chance, in a way decided by those present and entitled to participate in the EGM.

In the circumstances, I have required the Body Corporate to convene an extraordinary general meeting for the purposes of deciding whether or not to engage a body corporate manager, and as necessary, for deciding between alternative body corporate managers. My order will also facilitate the body corporate considering any other matters raised by owners or the committee.

In its reply to submissions, BCA suggest that the costs of resolving this matter (presumably therefore, the costs of a further meeting) should be borne by Mr Dixon. It is clear that Mr Dixon’s refusal to accept the advice of BCA regarding deciding motions with alternatives is the cause of this dispute, which has necessitated the calling of a further extraordinary general meeting. It is also arguable that Mr Dixon’s refusal to accept the advice of BCA was unreasonable given his own apparent lack of knowledge of the relevant provisions of the legislation. However, the minutes also show that the other participants in the meeting were agreeable to the matter being referred to this Office. As a result, I consider that the costs of the meeting required by this order should be met by the Body Corporate.

It is evident from the material before me that there was some confusion at the EGM about proxies and voting for corporate lot owners. While I do not intend to make any orders about these issues here, I will make some brief comments which I hope will be of assistance to owners for future general meetings.

In general terms, a "voter" for a general meeting of a body corporate may appoint a proxy to act for the person at the general meeting (section 72(1) of the Standard Module). However, it is important to note that bodies corporate may, by special resolution, prohibit the use of proxies for particular things or altogether (section 72(2) of the Standard Module). Section 73 of the Standard Module sets out the required forms of proxies and sections 74 and 75 of the Standard Module include a number of provisions regulating the use of proxies.

In this case, it is important to note section 74(3)(f) of the Standard Module which restricts the use of proxies for voting on motions proposing the engagement of a person as a body corporate manager. Specifically, section 74(3)(f) of the Standard Module provides that a vote by proxy must not be exercised at a general meeting:

(i) the engagement of a person as the body corporate manager (including a part 3, division 10 engagement) or a service contractor, or the authorisation of a person as a letting agent; or

(ii) the amendment or termination of an engagement or authorisation mentioned in subparagraph (i)."

Therefore, it is correct to say that Mr Dixon was not entitled to exercise proxies at the EGM for voting on the motion proposing the engagement of a body corporate manager.

I do note in their submission that Mr Dixon and Mrs Dixon express concern that voting by proxy is the only legal way for a company to vote at a general meeting of a body corporate. This is not correct. A "voter" for a general meeting of a body corporate may be an individual "who is a corporate owner nominee" (section 49(1)(c) of the Standard Module).

Therefore, it was and is possible for Hepron Pty Ltd and Palcourt Pty Ltd to nominate Mr Dixon as a corporate owner nominee, which would enable him to vote on behalf of those companies without using a proxy. I understand that at some time previously, the Body Corporate recorded Mr and Mrs Dixon as corporate nominees for these two companies. Therefore, it appears that they were entitled to vote on behalf of Lots 1 and 6 without use of a proxy.

It is important to note that sections 49(5) and (6) of the Standard Module provide certain requirements for the nomination of a person as a corporation or corporate owner nominee. I suggest that Mr and Mrs Dixon confirm that they have been properly recorded as corporate nominees for Hepron Pty Ltd and Palcourt Pty Ltd to ensure that they are able to vote on behalf of those companies at future general meetings. A corporate owner may notify a body corporate of its nominee by providing the body corporate secretary with a properly completed form BCCM 8 Version 4 Information for Body Corporate Roll. This form is available from this Office (telephone 1800 060 119) or on-line at www.dtftwid.qld.gov.au/disputeres/bccm

In addition, while Mr Dixon is not entitled to exercise a proxy for Ms Gwen Dixon (the registered owner of Lot 4) for voting on a motion to engage a body corporate manager, Ms Gwen Dixon is free to vote in writing on such a motion, to attend the relevant meeting personally, or to appoint Mr Dixon in another representative capacity (not as a proxy) in accordance with the requirements of section 49 of the Standard Module. From notes on a proxy form, it appears that Ms Gwen Dixon has appointed Mr Dixon and Mrs Dixon as attorneys under an enduring power of attorney. Ms Gwen Dixon should ensure that the Body Corporate is properly notified of this arrangement, and in that case, it is not necessary for Mr or Mrs Dixon to exercise a proxy to vote on behalf of Lot 4. Again, form BCCM 8 Version 4 Information for Body Corporate Roll may be used to inform the Body Corporate of the details of a lot owner’s representative.

^[1] Body Corporate and Community Management Legislation Amendment Regulation (No.1) 2003 – Explanatory Notes for SL 2003 No.263 at page 9

Number of Scheme:	15022
Name of Scheme:	Tobermory
Address of Scheme:	216 The Esplanade Burleigh Heads, Queensland

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Tobermory [2005] QBCCMCmr 12 (11 January 2005)