Victoria Square [2005] QBCCMCmr 149 (15 March 2005)

Number of Scheme:	5721
Name of Scheme:	Victoria Square
Address of Scheme:	15 Victoria Avenue BROADBEACH QLD 4218

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

I hereby order that the Body Corporate not incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolutions 8, 9 and 11 purportedly made at the AGM held on 3 February 2005.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0167-2005

"Victoria Square" CTS 5721

"Victoria Square" is a subdivision of 76 lots registered as a building unit plan (now known as a building format plan). The regulation module applying to the scheme is the Accommodation Module.

Application

By application received by this Office on 8 March 2005, the applicant has sought the following order of an adjudicator:

That Resolutions 8,9 and 11 purportedly made at the Annual General Meeting held on 3 February 2005 be declared invalid and of no effect.

Pending a final decision, an interim order is sought that the Body Corporate not incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolution 9 purportedly made at the AGM held on 3 February 2005.

Jurisdiction

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) & (2) provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...

Interim Orders

This dispute resolution application was made on 8 March 2005. The Commissioner has referred the application to me pursuant to section 267 of the Act for consideration for an interim order. At this time, I am solely concerned with the threshold issue of whether an interim order is warranted. In any consideration of an application that seeks the making of an interim order, it is necessary to determine whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279 are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

The applicant is the owner of lot 5, a ground level shopfront adjacent to the main entrance of the building which includes residential units on the upper levels. The majority of the shops on this level are restaurants and food outlets, although lot 5 has been occupied by a travel agency and, I understand, is now occupied by a unit "fitout" business.

At the AGM held on 3 February 2005 a number of motions were considered. This application relates specifically to motions 8,9 and 11, set out below:

8. Upgrade to Residential Entrance
That the Body Corporate engage Building and Associated Contractors (with the approval of the Committee) to undertake the extension and renovation work to the entry and lobby of the main building at a net cost not exceeding $350,000 as per Quantity Surveyor’s Indicative Budget with the cost to be met from accumulated monies in the sinking fund.

9. Supply & Install Awnings/ Shade Sails
That the Body Corporate engage a contractor to supply and install awnings ands shade sails to the ground level commercial/ restaurant areas with all costs to be met from accumulated monies in the sinking fund. This work would not take place should the upgrade to the residential entry way not proceed.

That the Body Corporate engage Paul Roarty ATF The McKenzie World of Shade Unit Trust to provide and install awnings and shade sails to the ground level commercial / restaurant areas at a cost of $196,193 (plus GST) as per quote and scope of works.

11. Voting – Residential Lot Owners/ Commercial Lot Owners
With the approval of the Body Corporate Committee, motions can be put to a General Meeting of the Body Corporate which would allow either the Residential Lot Owners or the Commercial Lot Owners separately to vote to undertake a task relevant to their needs and impose, if appropriate, a Special levy on their specific Lot Owners only to fund the proposal. This motion was carried on lot entitlements - 2,355 yes & 1,196 no.

The Minutes of the Annual General Meeting recorded the applicant’s objection to this motion on the following grounds:

The applicant is seeking an interim order that owners should not incur any costs pursuant to allegedly flawed resolutions. The applicant submits that preparation and lodgement of the intended development application should be deferred until after the owners have properly decided whether to approve the project or not.

It is claimed that Motion 8 purports to be authority for expenditure up to $350,000 by the Committee without a general meeting viewing at least 2 quotations as required by the Regulations.
On the other hand, the Minutes record the Chairman’s observation that the purpose of motion 8 was to obtain owners general approval to the project, in order that a development application may be made to Council. It was always the intention that a further general meeting be convened to allow lot owners to approve the final works and select the works contractor from final quotations submitted by the Committee.

In relation to Motion 9, the applicant claims that construction of shade sails would disadvantage the applicant’s shop premises as it would then be hidden from passing trade. As a consequence, the premises would be difficult to let and would impact on the rent which could be charged. It is submitted that such actions by the Body Corporate are unreasonable.

The applicant believes that Motion 11 purports to authorise the Committee to decide which groups of owners will vote on a particular issue and strike special levies against some lot owners but not others, and is therefore discriminatory and contravenes the Act.

Determination

Pending a final decision, an interim order is sought that the Body Corporate not incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolution 9 purportedly made at the AGM held on 3 February 2005.

At this point in time I intend to grant the interim order requested by the applicant. On the face of the application and annexed material there are a number of issues which are cause for concern.

Firstly, Motion 8 refers to the engagement of contractors to undertake the extension and renovation work to the entry and lobby of the main building at a cost of up to $350,000 which is to be met from the sinking fund. While the applicant’s main concern regarding this motion was that two quotes have not been obtained for this expenditure, it is also possible that the proposed extension and renovation work may be of such a nature that it should not be paid for solely from the sinking fund. It should be noted that section 98 of the Body Corporate and Community Management (Accommodation Module) Regulation contemplates that the purpose of the sinking fund is to cover anticipated spending of a capital or non-recurrent nature. I have similar concerns regarding the proposal to install awnings and shade sails at a cost of $196,193 (plus GST). I would point out that these are concerns which I have at this point in time and that these concerns could well be dispelled by the provision of further information by the respondent body corporate.

Secondly, the applicant claims that the erection of awnings and shade sails will impact adversely on the use of her lot. In this regard it is at least arguable that the Body Corporate is not acting in compliance with its obligations under the Act. Section 35 of the Act provides that lot owners own the common property as tenants in common, which gives each owner a general proprietary right to use the common property. Sections 94 and 152 of the Act provide that the body corporate is to administer, manage and control the common property, reasonably and for the benefit of all owners.

Thirdly, I have concerns regarding Motion 11 which provides:

With the approval of the Body Corporate Committee, motions can be put to a General Meeting of the Body Corporate which would allow either the Residential Lot Owners or the Commercial Lot Owners separately, to vote to undertake a task relevant to their needs and impose, if appropriate, a Special levy on their specific Lot Owners only to fund the proposal.

While I have not been fully appraised of the intent of this Motion, it does appear to indicate a contemplated course of action which may contravene the Act. The scheme of Chapter 3, Division 4 of the Act contemplates that each lot in a scheme is entitled to a vote upon a motion.
While lot owners are entitled to effect improvements to common property for their benefit, at their own cost, under section 113 of the Accommodation Module Regulation, such improvements must be authorised by special resolution of the Body Corporate.

For these reasons I order that, pending final determination of this application, the Body Corporate is not to incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolutions 8, 9 and 11 purportedly made at the AGM held on 3 February 2005.

It should be noted that this is an interim order which is temporary in nature until a final order is made. I consider that an effective resolution of this application requires further investigation, particularly by requesting affected parties to make written submissions about the application before the matter is finally determined.

(i)	two quotations had not been obtained for the expenditure proposed in motion 8; and
(ii)	Both motions 8, 9 & 11, if passed would be unreasonable as they would affect the applicant’s business premises.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Victoria Square [2005] QBCCMCmr 149 (15 March 2005)