Isle of Palms Resort [2005] QBCCMCmr 156 (18 March 2005)

Last Updated: 5 July 2005

REFERENCE: 0159-2005

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20860
Name of Scheme:	Isle of Palms Resort
Address of Scheme:	21 Coolgardie Street ELANORA QLD 4221

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

Eastmond Enterprises Pty Ltd and Varindi Pty Ltd, the owners of lot 180

I hereby order that the application by Eastmond Enterprises Pty Ltd and Varindi Pty Ltd, the owners of lot 180, for an interim order prohibiting motions 8, 10, 11 and 12 from being submitted to the AGM for the body corporate for "Isle of Palms" to be held on Monday 21 March 2005, pending a determination being made of whether such motions should be ruled out of order, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0159-2005

"Isle of Palms Resort" CTS 20860

The applicants, Eastmond Enterprises Pty Ltd and Varindi Pty Ltd, the owners of lot 180, have sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote –

An order ruling motion numbers 8, 10, 11, and 12, out of order, such motions being submitted in the notice of AGM for the body corporate for "Isle of Palms Resort" to be held on Monday 21 March 2005.

The applicants have also sought the following interim order:

An interim order prohibiting motions 8, 10, 11 and 12 from being submitted to the AGM for the body corporate for "Isle of Palms" to be held on Monday 21 March 2005, pending a determination being made in regard to the substantive order sought in paragraph 5 above.

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

(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.

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) provides that an 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.

In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset 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(1) 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 which 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.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances. However, given that an interim order may be made ex parte (ie. without reference to, or submission from the respondent named in the matter), then as a guide, where the circumstances or matters in dispute include matters or allegations not capable of objective consideration, or ready determination, or relate to issues of credibility or character, for example, where an interim order would be inappropriate, then the request for an interim order will be refused. It is a matter for an adjudicator to determine in respect of each application.

By way of interim order, the applicants seek that certain motions proposed to be considered at the AGM of the body corporate to be held on 21 March 2005 not be considered by the body corporate in general meeting pending a determination of their validity. The applicants submit that the motions should be ruled out of order. The basis on which motions might be ruled out of order (by the chairperson) at a general meeting is as set out in section 45 of the Accommodation Module, quote:

45 Power of person chairing meeting to rule motion out of order [SM, s 47]
(1) The person chairing a general meeting of the body corporate must rule a motion out of order if--
(a) the motion, if carried, would--
(i) conflict with the Act, this regulation or the by-laws, or a motion already voted on at the meeting; or
(ii) be unlawful or unenforceable for another reason; or
(b) except for a procedural motion for the conduct of the meeting, or a motion to correct minutes--the substance of the motion was not included in the agenda for the meeting.
(2) The person chairing the meeting must, when ruling a motion out of order--
(a) give reasons for the ruling; and
(b) for a ruling given under subsection (1)(a)--state how the ruling may be reversed by the persons present and entitled to vote on the issue.
(3) The persons present and entitled to vote may reverse a ruling given under subsection (1)(a) by passing an ordinary resolution disagreeing with the ruling.
(4) The reasons given by the person chairing the meeting for ruling a motion out of order must be recorded in the minutes of the meeting.

Those motions sought by the applicants to be not considered and ultimately sought to be ruled out of order are motions 8, 10, 11 and 12, namely:

8. Temporary Parking: that on a temporary basis residents be allowed to park a car in their driveways provided the car fits wholly within the driveway and does not encroach on the roadway.
10. Caretakers Breach of Code of Conduct: That the Caretakers be breaches on the Code of Conduct of the Caretaking and Letting Agreements due to the number of complaints against management received by the committee.
11. Upgrade Maintenance and Cleaning Services: That by April 2005, the management upgrade maintenance and cleaning standards to the Australian / NZ standard IS9001:2000.
12. Continuation of Legal Assistance: That the committee be authorised to continue with legal assistance in the adjudication of application 0163 to conclusion with the approval to expend monies in excess of the limit allowed by the committee.

All motions are stated in the agenda to have been proposed by the committee, and all motions are stated to require an ordinary resolution in order to be carried.

Whilst the applicants have described themselves as owners in the application, this description does not fully explain their position vis-a-vie this body corporate, both generally, and also, specifically in respect of certain other proceedings which are currently pending. In the final order to application 611 of 2004 which I recently adjudicated, and where the same owners were the applicants, I stated as follows:

The background to this dispute is that currently there is a contractual dispute between the body corporate and the applicant in its capacity as the caretaking service contractor for the scheme. This dispute (pursuant to two applications (163 and 610 of 2004)) is to be determined by specialist adjudication, by RAI Myers of Counsel. ...

That is, the applicants are not only owners of a lot in the scheme, and are also the current holders of the caretaking and letting agreements. It is in this latter capacity in which they are currently in dispute with the body corporate for the scheme. That dispute is currently on-going and is being heard by Specialist Adjudicator, RAI Myers of Counsel. It is in the context of this on-going contractual dispute that the applicants as owners of a lot in the scheme, continue to submit other applications for dispute resolution to this office.

Subsequently, in order 0611 of 2004, I commented that:

However, I also take a very cautious view of applications of this nature. One must be sceptical I believe of the motives behind an application by a party to litigation (or a proceeding) seeking to force or require the other party to that proceeding to undertake certain actions (in this case to call an EGM). I consider it reasonable to conclude that any party to litigation or proceedings is concerned principally (and probably almost exclusively) with advancing their own position vis-a-vie that litigation or proceedings. I consider it relevant to have regard to this aspect in determining such applications.

It is a rare situation, maybe even unique, where one party to litigation or proceedings has, in addition to the contractual relationship between the parties, a separate statutory basis allowing that party to commence proceedings seeking to require the other party to undertake certain actions relevant or pertaining to the litigation or proceedings. An adjudicator should be careful not to allow an abuse of this ability to the detriment of the other party to the litigation or proceedings. Moreover, in considering this aspect, it would be improper for the adjudicator to have any regard to the merits of the other litigation or proceedings between the parties.

In my view, the current application is an example where the applicants appear to be seeking to use an available dispute resolution mechanism to frustrate or otherwise reduce the ability of the other party (the body corporate) to other proceeding to properly prosecute or advance its interests in those proceedings. For example, in the previous application, the applicants were alleging that the body corporate had not properly informed owners of the other proceedings, and further had not sought to raise sufficient monies to fund those proceedings. Now, in any apparent turnabout from that earlier position, the applicants are seeking to prevent, through the ruling out of order of motion 12, the body corporate from determining a motion to authorise the raising of additional monies to fund such proceedings against the applicants. Previously the applicants were alleging that the body corporate had failed in its statutory obligations in this regard. Now, it might be suggested that the applicants are seeking to prevent the body corporate from complying with such previously alleged statutory obligations. One wonders at the merits of this current application, other than perhaps as a diversion from the main contractual dispute. Further, one must seriously begin to question the motivation of the applicants in continuing to submit these applications. In my final determination, I intend to consider the applicability of section 270(1)(c) dealing with the dismissal of applications on the basis of "frivolous, vexation, misconceived or without substance". It should be noted that such an order can include an associated costs order against the applicants. Perhaps it is necessary to impose on the applicants an order that they not be permitted to make further applications to this office until the contractual dispute in which they are current engaged with the body corporate is resolved. This however would be subject to any necessary interlocutory type applications which might be necessary in connection with the contractual dispute. Any such applications should be considered by the specialist adjudicator appointed for the contractual dispute.

The grounds for the chairperson ruling a motion out of order under section 45 are very limited. Namely, that the motion, if carried, would--
(i) conflict with the Act, this regulation or the by-laws, or a motion already voted on at the meeting; (ii) be unlawful or unenforceable for another reason; or
(b) except for a procedural motion for the conduct of the meeting, or a motion to correct minutes--the substance of the motion was not included in the agenda for the meeting.

The provisions of (b) have no application here. I make the observation that the applicant’s grounds appear to only generally seek to argue that the motions are in conflict with the Act or regulation etc or unlawful or unenforceable for another reason. In any event, I consider that these aspects require further consideration, and I do not intend to consider the specific objections to their validity in the context of an interim order. That is, I am not, in the context of an interim order application, prepared to consider the substantive merits of the applicant’s grounds, and any contrary arguments submitted by the body corporate, and to determine whether it is likely that a chairperson might or should invoke the provisions of section 45. However, my prima facie impression is that it is unlikely that the motions in question should in fact be required to be ruled out of order.

In particular, there is little doubt in my view that a body corporate in general meeting has power to determine parking rights of owners and occupiers of lots, and that an on site manager has no ability to prevent this. Further, a body corporate in general meeting is competent to determine whether to take legal proceedings, including further proceedings, against a party which it is currently in dispute with, and in my view, any attempt to prevent such determination (particularly by the other party to that very dispute) is inappropriate, and should not be entertained. In respect of maintenance and cleaning standards, generally a body corporate is entitled to consider the standard at which these services might be provided. It is a different issue whether a newly determined standard might be imposed in the context of an existing
Caretaking and Letting contract. However, this does not prevent a body corporate from determining a standard. Finally, given the perceived intent of the applicants in 0611 of 2004, I am simply not prepared to contemplate the basis on which motion 12 might be ruled out of order, at least in the context of this interim order. I consider that the actions of the applicants in seeking to have this motion ruled out of order appear to me to be simply hypocritical.

In the circumstances, I conclude that the effect of the interim order as sought by the applicants, if made, will in fact be final in its application. That is, if motions are prohibited from being submitted to a meeting, then they cannot be considered by the body corporate. This consequence has the effect of achieving the result intended by the applicants; that the motions not be proceeded with. I am not prepared to allow this consequence. The application for an interim order is dismissed.