One Park Road [2005] QBCCMCmr 21 (12 January 2005)

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

I hereby declare that resolution 4 of the extraordinary general meeting of 17 July 2003, which purported to limit the committee to making decisions involving spending of no more than $500, was at all times void on the basis that it was unreasonable and effectively deprived the committee of a substantial part of its function.

I further declare that resolution 5 of the extraordinary general meeting of 17 July 2003, which purported to give the majority owners an opportunity to veto committee decisions, was at all times void on the basis that the body corporate in general meeting had no power to alter its procedures in this manner.

I further declare that resolution 10 of the extraordinary general meeting of 17 July 2003, which purported to appoint Edith Dindas Pty Ltd as building manager, was at all times void on the basis that it was unreasonable for the body corporate to engage Edith Dindas Pty Ltd as building manager on the terms provided and in the context of other offers for building management services available to the body corporate. I further order that, for any motion proposing to appoint a replacement building manager, Edith Dindas Pty Ltd is prohibited from voting for itself or an associate within the meaning of section 309 of the Body Corporate and Community Management Act 1997. On a just and equitable basis, I further order that the body corporate is to refuse to accept votes from any owner in favour of appointing themselves or an associate as the replacement building manager. The body corporate is to provide a statement to this effect in the explanatory material for any such motion.

I further declare that any resolution to regulate car parking on the scheme passed at the general meeting of 6 September 2004 was at all times void, on the basis that it was unreasonable for the function of the committee to be circumvented in this respect by the attempt to have this issue determined by the majority owner in general meeting without first seeking to have the committee consider the issue.

I further order that a committee meeting (committee meeting) must be held within one month of the date of this order. Given the absence of the secretary, I declare the position of secretary vacant, grant each and every committee member the authority to instruct the body corporate manager to call the committee meeting at a reasonable time to be set at the discretion of the body corporate manager, and require the committee to appoint a replacement secretary at the meeting.

I further order that, at the committee meeting, the committee must:
1. Pass a resolution specifying how the body corporate is to regulate car parking at the scheme, or alternatively, setting one or more motions to be put before all owners in general meeting specifying how the committee recommends that the body corporate regulate car parking at the scheme;
2. Pass a resolution instructing the body corporate manager to call the annual general meeting for the 2003-2004 financial year (AGM), to be held within three months of the date of this order;
3. Pass a resolution setting the time and date of the next scheduled committee meeting, to be held no more than six weeks after the present committee meeting; and
4. Pass any other resolution that the committee believes is within its power and necessary for the reasonable administration of the common property and body corporate assets for the benefit of lot owners, including resolutions that are necessary for the performance of obligations formerly performed by the building manager.

I further order that nomination and election of committee members at the AGM is to be performed, as nearly as practicable, in accordance with the procedures for nomination and election of committee members under the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) as in force at 30 November 2003. I further order that Edith Dindas, Edith Dindas Pty Ltd, and any associates of those persons within the meaning of section 309 of the Body Corporate and Community Management Act 1997 (Act) are only entitled to nominate one individual for committee membership between them.

I further order that the AGM is to be deemed to be held within three months of the close of the financial year provided that the AGM is held within three months of the date of this order. I further order that the body corporate must provide a written request to all owners seeking committee nominations and submission of motions for the AGM and that any nominations and motions submitted by owners to the body corporate manager are deemed to have been submitted in time for consideration at the AGM provided that they are received by the body corporate manager within three weeks after the notice seeking submission of nominations and motions was sent to owners.

I further order that, at the AGM, the body corporate must vote to install mailboxes for each lot in a suitable position at or near street alignment of the scheme land, either:

(a) as an improvement to the common property for the benefit of the applicants, this improvement to follow a design proposed by the applicants and be at the applicants’ cost; or
(b) as an improvement to the common property made by the body corporate, according to a design proposed by the respondents and at the body corporate’s cost.

Within one month of the date of this order, the applicants and the respondents are both to ensure that they, or their representatives, submit a detailed motion to the body corporate manager showing the preferred design and cost of these proposals. Both motions are to be voted upon at the AGM and the proposal identified in the motion with the greater number of votes in favour according to a poll must be implemented within two months of the AGM.

I further order that, at the AGM, the body corporate must vote to install a directory board or boards in a suitable position, either:

(a) as an improvement to the common property for the benefit of the applicants, this improvement to follow a design proposed by the applicants and be at the applicants’ cost; or
(b) as an improvement to the common property made by the body corporate, according to a design proposed by the respondents and at the body corporate’s cost.

Within one month of the date of this order, the applicants and the respondents are both to ensure that they, or their representatives, submit a detailed motion to the body corporate manager showing the preferred design and cost of these proposals. Both motions are to be voted upon at the AGM and proposal identified in the motion with the greater number of votes in favour according to a poll must be implemented within two months of the AGM.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0703-2003

"One Park Road" CTS 2114

One Park Road Community Titles Scheme (One Park Road) is a 39 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Commercial Module Regulation (Commercial Module).

There are a number of disputes currently before this office in applications referenced 266-2003, 361-2003, 682-2003, 703-2003 and 521-2004. All owners have had the opportunity to, on request, inspect the material for all of the applications concerning One Park Road and all owners have been given the opportunity to make submissions in respect of these applications. This order is to resolve the disputes in all five applications and these reasons for decision apply to all the above applications.

The applications are variously by Bentonic Pty Ltd (lot 1), Chung-Ming Su & Shu-Chen Lin Su (lot 2), Nunzio La Rosa (lot 3), Kiara Holdings Pty Ltd (lot 4), I-Ying Wang (lot 7), Lee Li-Chu Chen & Chi-Chang Chen (lot 8), Maxwell Keith Dunstan, Anthea Jean Dunstan & Guy David Dunstan (lot 9), Audax Australia Pty Ltd (lot 16), Jimmy Lok Kee Ma & Verney Mei Kuen Ma (lot 29), and/or Werner Friedhelm Sauer (lot 41) (applicants) seeking orders against Edith Dindas and Edith Dindas Pty Ltd (respondents) and/or the body corporate.

The applicants are seeking orders relating to:

One Park Road is a two storey retail and office complex. Title records show that the scheme was established in 1994 and that MD Holdings Pty Ltd and F Dindas Nominees Pty Ltd were original owners and developers of the scheme. The majority of lots in the scheme are now held by Edith Dindas Pty Ltd.

The background provided in the submissions indicates that Mark and Edith Dindas were involved with the scheme since its inception. However, in 1997, as a result of matrimonial separation and a property settlement, 50% of the lots in the scheme were transferred to Edith Dindas Pty Ltd. Subsequently, Mark Dindas sold his interest in the scheme, including rights under a services contract granted by the body corporate to Hallmark Developments Pty Ltd on 16 March 1994 (Building Management Agreement). Edith Dindas Pty Ltd purchased some of these remaining lots as well as the rights under the Building Management Agreement.

Current holdings are:

Based on these figures, Edith Dindas Pty Ltd holds over 60% of the lot entitlements for the scheme and the applicants jointly hold approximately 35% of the lot entitlements.

The scheme has a basement car park and two levels of units. Most of the applicants own ground floor units used as retail outlets. Most of the top floor units are leased out as serviced offices and are owned by Edith Dindas Pty Ltd.

The applicants oppose Edith Dindas Pty Ltd voting to appoint itself as building manager for a period of up to 25 years and at a cost of $61,600 per year. This building management agreement was entered into between the body corporate and Edith Dindas Pty Ltd pursuant to a resolution passed at an extraordinary general meeting of the body corporate on 17 July 2003.

The applicants say that other building managers with greater experience had offered to manage the scheme for less cost. However, the vote to appoint of Edith Dindas Pty Ltd as building manager was carried on the strength of voting power held by Edith Dindas and Edith Dindas Pty Ltd, contrary to the wishes of the minority owners.

Submissions on behalf of Edith Dindas Pty Ltd are to the effect that Edith Dindas Pty Ltd has effectively been the onsite manager for the scheme since its establishment in or about 1993 and there have been no complaints previously made regarding this management or the remuneration under that agreement. It is also submitted that there is nothing unlawful in Edith Dindas Pty Ltd choosing to vote in general meeting to appoint itself as the building manager.

The scheme contains approximately 65 secure car parks and over one hundred car parks that are open for customers.

Each occupier is entitled to the use of one car park and Edith Dindas Pty Ltd, as building manager, administers the security card access to these car parks. Edith Dindas has submitted that there are sufficient secure car parks that occupiers can gain access to an additional secure car park by paying the body corporate $105 per month.

However, she has said that employees of the occupiers are parking for free in customer car parks and that people who are not customers are parking for free and then visiting other schemes or going to the nearby train station.

As a result, Edith Dindas favoured employing someone to monitor parking and to only allow free parking for half an hour to validated customers. The proposal was opposed by a number of the other owners and on 30 August 2004 I made an interim order in respect of application 521-2004 that restrained Edith Dindas Pty Ltd from carrying out this proposal to regulate parking pending a final determination of the dispute.

The applicants submit that Edith Dindas Pty Ltd is unreasonably opposing the installation of mailboxes and directory boards at the scheme. The applicants also object to the manner in which Edith Dindas Pty Ltd administers the electricity supply and mail delivery within the scheme.

However, submissions on behalf of the respondents are to the effect that the respondents support the erection of mailboxes and a directory board but simply in a different manner to that proposed by the applicants. Further, the respondents support owners arranging their own electricity supply but simply do not consider this to be a body corporate expense to be funded primarily by Edith Dindas Pty Ltd. The respondents submit that they have never prevented the applicants from obtaining their own electricity supply and that the applicants have chosen not to obtain their own supply because they refuse to meet the cost of arranging their own supply.

It is apparent from the material before me that the committee has not been functioning effectively for some time. In particular, the secretary is no longer associated with the scheme and no meetings have been held for over a year.

The respondents say that, in the past, the applicants had effective control of the committee and, in that way, effective control of the body corporate. However, the applicants say that, presently, the respondents control the committee and have rendered it ineffective.

In response, the respondents submit that Edith Dindas has only one vote on the committee and that Edith Dindas Pty Ltd has never exercised its voting power to try to gain effective control of the committee. Rather, Edith Dindas has said that, in early 2003, she became increasingly concerned about being excluded from any committee decisions or discussion regarding the operation of the scheme when the chairperson refused to call committee meetings and effectively closed her out of any input into decisions by passing flying minutes with the assistance of the majority control enjoyed by the applicants at committee level. It is submitted that these decisions included a decision to engage lawyers for the applicants at body corporate expense and to pay one of the applicants $50,000 per year to be caretaker of the scheme.

For a general meeting on 17 July 2003, Edith Dindas proposed a motion that restricted the committee from entering into any contract or arrangement involving expenditure in excess of $500, excluding emergency repair of utility infrastructure. Edith Dindas also proposed a motion that prevents the committee from carrying out any committee resolution if a notice of opposition to the committee resolution is given by the owners of at least half the lots in the scheme. Both these motions were carried on the majority votes of the respondents despite other owners opposing the motions.

The applicants seek to have both of these resolutions declared void. Committee meetings have not been proceeding in the meantime so it is not necessary to consider the validity of any resolutions purportedly passed or implemented in contravention of these requirements.

The legislation recognises self management as an inherent aspect of community titles schemes and I would encourage all owners to consider ways in which they can improve communication between both groups and negotiate acceptable solutions. However, one of the objects of the legislation is to balance the rights of individuals with the responsibility for self management of schemes. I note that the parties have unsuccessfully attempted mediation and some external intervention appears necessary.

An adjudicator has jurisdiction to make an order that is just and equitable to resolve a dispute (Act, 276). Orders may include orders declaring a resolution void if it is unreasonable or declaring a motion passed if the opposition to that motion is unreasonable. If necessary, an adjudicator may make an order appointing an administrator to perform a particular obligation of the body corporate, or to perform the body corporate’s obligations generally. However, I caution the parties that intervention by an adjudicator is unlikely to provide a long term solution given this situation where decisions will continually need to be made that will affect two groups with disparate interests. The fundamental conflict appears likely to continue unless owners make sustained efforts to negotiate workable solutions before disputes intensify.

At the outset, I think it is necessary for the applicants to recognise that a majority owner in the scheme (or majority group of owners) has the largest investment in the scheme and the legislation gives this majority the right to, in general meetings, make decisions regarding how the scheme is to function or is to be improved. On the other hand, the respondents need to recognise that the day-to-day decisions concerning the scheme may be dominated by the applicants who are numerically superior in terms of committee representation.

All individuals have some legislative protection in the sense that the body corporate must exercise its functions reasonably, and must administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners (Act 94, 152). Therefore, the respondents can challenge decisions made by the committee if they are unreasonable and not for the benefit of lot owners. The applicants can challenge decisions made in general meeting on the same basis.

As well as overturning particular decisions that are unreasonable and not for the benefit of lot owner, an adjudicator can appoint an administrator to make decisions on behalf of the body corporate (Act, 278). After considering the present applications I have concluded that it would not be just and equitable to appoint an administrator at this time. In particular, the appointment of an administrator to make decisions on behalf of the body corporate would deprive all owners of a role in decision making and amount to an additional expense for each owner. However, if future applications indicate a continued inability of the body corporate to administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners then it may be appropriate to appoint an administrator to make decisions for those purposes.

The body corporate’s functions are primarily to administer the common property and body corporate assets for the benefit of owners and enforce the by-laws for the scheme (Act, 94). Powers of the body corporate include the power to enter into contracts, deal with property, and employ staff (Act, 95).

Certain decisions of the body corporate must be put to all owners in general meeting. However, the committee is responsible for the day-to-day administration of the body corporate and, for most matters, a decision of the committee is legally effective as a decision of the body corporate (Act, 100). It is therefore of significant concern if the committee is not functioning effectively.

It is apparent from the submissions that governance of the scheme is divided into two main groups, one with the ability to dominate committee decision making and the other with the ability to dominate decision making in general meetings.

This situation is complicated by both groups having different business interests in the sense that the lots of one group are primarily used as retail shops and the lots of the other are primarily used as serviced offices. It is further complicated in that the majority owner was associated with the original developers of the scheme and holds an appointment from the body corporate as building manager.

These issues have led to tension over decisions made both by both groups, at committee level and at general meeting level respectively.

As not all owners can be directly involved in the day-to-day management of the body corporate, owners elect committee members to perform this function on their behalf.

To ensure fair representation on the committee, the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) contains detailed provisions regarding the nomination and election of committee members. The Standard Module was also amended, effective from 1 December 2003, to improve the transparency of committee decision making and address issues including potential stacking of the committee to the advantage of a small number of owners, a body corporate manager, or the resident manager.^[1] However, the Commercial Module leaves matters of nomination and election to be determined by the body corporate itself in the form of a special resolution (Commercial Module, 13).

The committee of One Park Road, operating under the Commercial Module, would normally have very few limitations on its operations or the type of decisions it could make. However, the respondents have put forward and passed ordinary resolutions to prevent the committee making any decision involving expenditure of over $500 and to give the owners of at least half the lots the opportunity to veto committee decisions.

The applicants submit that the resolution restricting the committee from making decisions involving expenditure over $500 is inequitable and detrimental to the body corporate. It is submitted that this decision seems to have little or no benefit to the body corporate as a whole but effectively places control over all body corporate expenditure into the hands of one party. Further, it is claimed that the body corporate will not infrequently require expenditure over $500 and it is inappropriate to call a general meeting each time this expenditure is required.

On the other hand, the respondents have submitted that the committee was making inappropriate decisions involving spending that was for the benefit of certain individuals rather than the benefit of the body corporate. It is submitted that the respondents legitimately voted to place this restriction on the committee and the applicants have not established abuse of voting power by the respondents that would render this resolution invalid. The respondents submit that the applicants must establish that the vote was exercised by the respondents for the purposes of oppression before the resolution could be invalidated as constituting a fraud on the minority.

The legislation allows the body corporate in general meeting to pass a resolution restricting certain issues for decision by general meeting rather than by committee (Commercial Module, 15(b)). However, the legislation also provides guidelines for the composition and exercise of powers of the committee and the submissions provided give rise to some concern that this resolution was not passed in a genuine attempt to place reasonable limitations on the committee but was passed to render the committee ineffectual in its role of the day-to-day administration of the scheme.

It is a well accepted principle of equity that a majority shareholder in a company cannot alter the rules by which the company is governed in a way that is oppressive to a minority shareholder or group of shareholders.^[2] More generally, courts in equity have established the doctrine of ‘fraud on a power’ stating "a person having a power, must exercise it bone fide for the end designed, otherwise it is corrupt and void"^[3] and establishing that the doctrine of fraud on a power "authorises intervention where the power is exercised in bad faith or for purposes foreign to the power"^[4]. The New South Wales Court of Appeal has recognised this doctrine of fraud on a power as being of general application and, specifically, as applicable to bodies corporate under the Strata Titles Act of New South Wales.^[5]

While the Body Corporate and Community Management Act 1997 does not expressly confer equitable jurisdiction on an adjudicator, an adjudicator is expected to make an order that is "just and equitable" to resolve a dispute and adjudicators have jurisdiction to declare a resolution void if unreasonable or to declare a motion passed if the opposition to it is unreasonable (Act, 276). In considering whether a resolution is unreasonable it is instructive to consider decisions of the courts that have found a procedurally valid exercise of a power invalid on the basis it constitutes a fraud on the power. In particular, it is relevant that a fraud on a power can be constituted if the power is exercised for a purpose or with an intention beyond the scope of the power.^[6] The conduct does not need to be dishonest or immoral to constitute a fraud on the power.

In this instance, the body corporate in general meeting has voted to restrict the committee making any decision involving spending of greater than $500. I note that the body corporate in general meeting has the power to pass an ordinary resolution reserving an issue for decision by the general meeting rather than by the committee (Commercial Module, 15(b)). However, by preventing the committee from making decisions involving spending of greater than $500, the respondents significantly altered the powers of the committee.

The committee has an important legislated role to make decisions of the body corporate. In particular, committees for commercial schemes are usually unrestricted in the amount they can spend to perform their duties related to the administration of the common property of the scheme. This can be compared with a standard residential scheme where the legislation does protect individual owners from unexpected or excessive spending by restricting the committee to decisions involving spending of no more than $125 per lot (Standard Module, 103). For a scheme the size of One Park Road this would be a restriction against committee decisions involving spending of over approximately $5,000. For a residential scheme where ownership is primarily for investment purposes and lots are primarily for accommodation it is possible for owners to authorise the committee to make decisions involving spending of up to $450 per lot, being approximately $18,000 for a scheme the size of One Park Road (Accommodation Module, 101).

Against this background, the limit of $500 on decisions involving spending by the committee of One Park Road appears absurdly low. This limit effectively deprives the committee of a substantial part of its function. It means that decisions the committee could ordinarily have made now need to be made through the more cumbersome, expensive and time-consuming process of the holding of a general meeting. In effect, the resolution to impose this limit on committee decisions means that commonplace decisions that would ordinarily be made by the elected representatives of all owners are now made by the respondents exercising their majority vote in general meeting. This is the type of decision by a majority group that the courts recognise as a fraud on the minority. It is a resolution that I propose to invalidate on the basis that it is unreasonable and that a just and equitable order requires restoration of effective decision making powers to the committee (Act 94(2), 276).

There is argument from the respondents that they passed this resolution to prevent spending abuses by the committee. However, it is questionable whether a resolution effectively depriving the committee of a substantial part of its function is reasonable even if the committee had spent money for improper purposes. Rather, it would have been reasonable for the respondents to challenge those individual decisions on their merits. If wrongdoing was shown then any appropriate safeguards could have been put into place. At this time, I propose to declare void the resolution restricting committee spending to $500 on the basis that this resolution was unreasonable.

The body corporate in general meeting also passed a resolution to restrict the committee from carrying out any resolution for at least seven days (except for certain urgent, routine or administrative resolutions) to give the owners of at least half the lots in the scheme an opportunity to issue a notice of opposition to veto the committee resolution. This resolution is almost identical in wording to a provision of the Standard Module that allows the owners of at least half the lots in a scheme governed by that module to veto committee decisions (Standard Module, 37).

The applicants submit that the respondents put forward and passed this motion to further dilute the involvement and input that minority members of the body corporate are able to have in the conduct of the body corporate. However, the respondents’ submissions make the point that the body corporate in general meeting is always able to reverse a decision of the committee and that the adoption of this procedure is sensible to spare the cost of the calling of a general meeting in the event that the respondents seek to overturn a committee decision. These submissions from the respondents are persuasive and I am not satisfied that there is anything inherently unreasonable in this type of restriction.

However, the applicants have also submitted that the body corporate has no power to alter the procedures of the body corporate in the proposed manner. Unlike the preceding resolution that limited the power of the committee to make certain decisions, this resolution purports to change the procedures of the body corporate. The question in issue is whether the body corporate has the necessary power to make this change.

The applicants submit that neither the Act or the Commercial Module gives the body corporate power to make this change to its procedures and the motion should have been ruled out of order at the meeting. In response, the respondents rely on a provision of the Act that specifies that "the body corporate has all the powers necessary for carrying out its functions" as giving the body corporate power to regulate its procedures and processes in carrying out its functions (Act, 95).

Contrary to the submission of the respondents, I consider it necessary to distinguish between the functions of the body corporate and the procedures that regulate how the body corporate is to carry out its functions. The legislation sets out the procedures that regulate how the body corporate is to operate. The grant to the body corporate of the powers necessary to carry out its functions does not contain an implication that the body corporate also has a power to alter its procedures. It is possible for the body corporate to carry out its functions without altering the legislated procedures and those legislated procedures clearly indicate the specific instances where the body corporate may alter or create its own procedures. These instances include specifying the conduct of committee elections in the way decided by the body corporate by special resolution (Commercial Module, 13), calling of committee meetings by 7 day’s notice unless the committee otherwise decides (Commercial Module, 17), and the power to alter by special resolution the procedures for voting at general meeting (Commercial Module, 41).

In conclusion, the body corporate has no power to add to or alter the legislated procedures that govern how the body corporate is to carry out its functions except as specifically provided in those procedures. There is no specific power that would allow the body corporate to alter its procedures as resolved at the general meeting of 17 July 2003. I will therefore declare resolution 5 of that meeting to be void.

The committee has not been performing its functions as intended by the legislation. Meetings have not been held for over a year. The elected secretary no longer has any association with the scheme and the annual general meeting for 2004 has not been held, despite being required to be held by the end of 2004.

Given these circumstances, I consider it appropriate to require the calling of the annual general meeting and new committee elections. One Park Road is a commercial scheme and is entitled to, by special resolution, adopt its own procedures for the conduct of committee elections (Commercial Module, 13). I am informed by the parties that the body corporate had not adopted by special resolution any procedures for any of its committee elections in the past. However, the body corporate informally used the procedures set out in the Standard Module for its committee elections. Further, the body corporate recently passed a resolution to the effect that all future committee elections be according to the procedures under the Standard Module prior to recent legislative amendments, being those effective from commencement in 1997 to 1 December 2003. This resolution is currently being challenged by the applicants but I do not intend to decide the validity of that resolution at this time as not all affected persons have been given the opportunity to make submissions on that issue. As matters stand, it seems to me appropriate that the body corporate hold its committee elections in the same manner it has held them in the past, being as prescribed by the Standard Module as in effect from 1997 to 1 December 2003. I will therefore order that the elections be held following these procedures irrespective of the validity of the resolution currently being challenged by the applicants.

However, I propose to make one qualification to these procedures, being that Edith Dindas Pty Ltd and its associates are together only permitted to nominate one individual for committee membership. The reason for making this qualification is that the legislature has made clear the intention that each owner should be only able to nominate themselves or one other individual to serve on the committee.^[7] Members of the committee are required to make decisions on behalf of the body corporate for the benefit of all owners and are not entitled to vote on issues where they have a conflict of interest (Commercial Module, 23). It would be contrary to the intention of the legislature if the committee became a mere servant of a majority owner through persons associated with a single majority owner nominating and electing the majority of committee members.

The respondents have submitted that they have never made any attempt to stack the committee membership to suit their interests. However, where a person owns a lot and an associated company owns another lot then there would ordinarily be nothing irregular in both the individual and the company nominating a committee member. For example, if an owner of half the lots in a scheme divided that holding into four related entities then that person could go from being entitled to nominate only one committee member to being entitled to nominate four committee members and able to dominate all committee decisions without discussion. I therefore propose to order that Edith Dindas Pty Ltd and its associates within the meaning of section 309 of the Act are, between them, only entitled to nominate one individual for committee membership.

In summary, following the proposed procedures for committee elections, the secretary must serve a notice on each lot owner inviting the lot owner to nominate themselves or another individual entitled to be nominated (Standard Module, 13). If more nominations than positions are received then the secretary must prepare a ballot paper and owners can vote for their preferred representatives (Standard Module, 19). For the avoidance of doubt, if Edith Dindas Pty Ltd and its associates submit more than one nomination between them then all nominations submitted by those persons should be deemed invalid.

The applicants have also requested an order prohibiting Edith Dindas from acting as chair given her association with the majority owner. It is submitted that Edith Dindas lacks adequate knowledge of the Act and Commercial Module, that her duties as chairperson are compromised by her interest in Edith Dindas Pty Ltd as building manager and majority owner, and that she unreasonably prefers her own interests to the interests of other lot owners and the body corporate as a whole.

On balance, I do not consider it just and equitable to make this order. Majority ownership, in itself, is no basis for prohibiting an owner from acting as the chairperson. Further, the majority of conduct complained of relates to conduct of the majority owner in general meeting rather than conduct of Edith Dindas as chairperson. I therefore do not consider the order sought to be justified by the circumstances.

It is important that the committee does meet to administer the affairs of the body corporate prior to the holding of the annual general meeting and the new committee elections.

The elected secretary no longer has any involvement in the scheme. Therefore, I propose to declare the position of secretary vacant, grant each and every committee member the authority to instruct the body corporate manager to call the committee meeting at a reasonable time to be set at the discretion of the body corporate manager, and require the committee appoint a replacement secretary at the meeting.

In considering what relief is just and equitable to resolve the present disputes I consider it relevant to consider the likely consequences of granting the proposed relief.

The respondents will have the ability to nominate Edith Dindas as a committee member and elect her to the position of chairperson. On the other hand, other owners will all be able to nominate numerous other committee members between them and these committee members will form the majority of the elected committee. This means that, assuming the current division continues, procedural matters related to meetings may be influenced by the respondents but the actual voting will be dominated by the applicants. Further, the majority committee members will be able to overrule the chairperson on matters of procedure should that be necessary. Finally, the committee will no longer be restricted by an unreasonably low spending limit so the committee will be able to make effective decisions about the day-to-day administration of the scheme.

If the current division between the respondents and the applicants continues then this potential domination of the committee vote by the applicants will be of some concern to the respondents. On the other hand, the legislation protects the respondents in that the respondents can seek an interim order from an adjudicator to prevent the committee carrying out any resolution that they can demonstrate is unreasonable. Further, the respondents can call a general meeting to overturn any resolution of the committee and it would be for an aggrieved owner to bring an application before this office if they considered the respondents’ actions to be unreasonable.

Other issues will be restricted issues for the committee and will need to be decided by the body corporate in general meeting. If the current division continues then the respondents will dominate the vote on these issues and it is for the applicants to lodge an application if they consider the resolutions in general meeting to be unreasonable. The respondents may also seek to pass resolutions in general meeting to restrict the committee from considering additional issues. Given the background to the scheme, I would consider it important that such a resolution disclose a significant and legitimate reason for the passing of the resolution.

Similarly, the respondents may seek to circumvent the functions of the committee by requisitioning unnecessary extraordinary general meetings and using their majority voting power in general meeting to determine matters concerning the day-to-day administration of the scheme without first seeking that those matters be considered by the committee. If so, those actions may constitute grounds for the applicants to seek the appointment of an administrator to take over the functions of the body corporate in general meeting.

A second serious issue in dispute subsequent to the annual general meeting of 17 July 2003 is the appointment of Edith Dindas Pty Ltd as building manager.

The applicants submit that the resolution appointing Edith Dindas Pty Ltd as building manger is manifestly unreasonable^[8] when compared with competitive tenders. It is also alleged that by exercising its majority vote to appoint itself as building manager, Edith Dindas Pty Ltd committed a fraud on its voting power^[9] by exercising its votes for its own benefit rather than in the interests of the body corporate.

The respondents’ submissions state that, in order to amount to oppression, the agreement would have to confer an unreasonable benefit to the respondent, which was to the detriment and in total disregard of the rights and interests of the body corporate and other lot owners. These submissions deny that this is the case, though admitting that Edith Dindas Pty Ltd is gaining a financial benefit from the arrangement.

At the meeting of 17 July 2003, owners were given the opportunity to choose between appointing four different building managers. The copies of contracts provided contain the following basic terms:

In some cases it can be very difficult to fairly compare different contracts for services where the terms of supply can vary and the likely quality of the services provided may depend significantly on the reputation of the service contractor. However, after reviewing the contractual terms and given the significant disparity in price, I have no hesitation in reaching the conclusion that it was unreasonable and not in the best interests of body corporate that the offer from Edith Dindas Pty Ltd be accepted. The respondents’ submissions do not satisfy me that there were any circumstances that justify the body corporate binding itself to the significantly higher price and much longer term. In fact, the other contractors appear better experienced. Further, the respondents have not shown that a permanent onsite presence is necessary for building management or is a justification for the significantly higher price. Rather, it appears that an occasional presence to supervise tradespersons and perform other duties would be sufficient.

The respondents are correct in submitting that members of a company may generally vote in their own interests.^[10] However, the courts of equity have consistently invalidated the exercise of voting power by a majority of members in a company where the vote is a means of securing some personal gain rather than for purposes of the proper management of the company.^[11]

Similarly, in this jurisdiction, it is only committee members who are specifically prohibited from exercising their vote subject to a conflict of interest at committee level (Commercial Module, 23). Owners are not subject to any specific provisions regarding a conflict of interest when voting in general meetings. However, decisions of bodies corporate are subject to an overriding restriction in that the body corporate must act reasonably in carrying out its functions and administering body corporate assets (Act 94, 152). In the context of the other offers for building management services available to the body corporate, I conclude that the decision to appoint Edith Dindas Pty Ltd as building manager was unreasonable.

More technical objections by the applicants are that the engagement is invalid because it includes administrative services and is therefore an agreement for the appointment of a body corporate manager that did not comply with the requirements for appointment of a body corporate manager. The most relevant provision in this respect appears to be the maximum term of engagement of a body corporate manager being three years (Commercial Module, 65). It is also claimed that the agreement contains an illegal delegation of the body corporate’s decision making power by specifying that the body corporate must follow the building manager’s recommendation regarding the engagement of staff or contractors to maintain the building (Act, 97). Because of my conclusions above it is unnecessary for me to consider these submissions.

Based on my conclusion that the decision to appoint Edith Dindas Pty Ltd as building manager was unreasonable, the appropriate order is a declaration that the resolution was void.

The applicants have asked for an order requiring Edith Dindas Pty Ltd to repay all money paid pursuant to its engagement as a service contractor. However, I am not satisfied that I have jurisdiction to make an order of this nature which is properly a dispute between the body corporate that paid the money and Edith Dindas Pty Ltd in its capacity as service contractor rather than as owner (Act 226). This office only has jurisdiction over disputes between the body corporate and a service contractor when they arise out of a review under the Act of a contract entered into when the developer still has control of the body corporate (Act, 227). If the applicants were to pursue such an order they could consider alternative actions such as bringing a minority action in the name of the body corporate in a court of competent jurisdiction.

However, I am satisfied that it is within jurisdiction to grant a declaration that the resolution to appoint Edith Dindas Pty Ltd as building manager is void as being contrary to the Act. The question of the validity of a resolution of the body corporate can properly be characterised as a dispute between an owner and the body corporate (Act, 227(1)(b)). I acknowledge that a declaration that the resolution is void will have a consequential effect on the validity of the appointment of Edith Dindas Pty Ltd. However, it is squarely within the jurisdiction and powers of an adjudicator to make a declaration concerning the validity of a resolution upon application by an owner (Act 227, 276). The broader consequences of the declaration need not deprive the adjudicator of jurisdiction.^[12]

Having said that, even where there is jurisdiction to make a declaration regarding the validity of a resolution, there may be certain circumstances where it may be inappropriate to make a declaration for reasons of natural justice where persons who will be affected have not had an opportunity to make submissions. However, while Edith Dindas Pty Ltd is not a party to this dispute in its capacity as service contractor, Edith Dindas Pty Ltd has had the opportunity to make submissions about the validity of the resolution in its capacity as an owner. The requirements of natural justice therefore do not require that I refrain from making this declaration.

In summary, Edith Dindas Pty Ltd voted as majority owner to give itself the benefit of a contract as building manager that committed the body corporate to a much longer term and much higher fees than would have been necessary to obtain similar services from other qualified building mangers. This resolution was contrary to the requirement that the body corporate administer the common property and its assets reasonably and for the benefit of lot owners (Act, 152).

Unlike an independent third party, the involvement of Edith Dindas Pty Ltd in the making of this resolution, in my view, precludes it from claming that it entered into the engagement honestly and without knowledge of irregularity. I am satisfied that it is appropriate to declare the resolution void notwithstanding any consequential effect of this declaration in invalidating the appointment of Edith Dindas Pty Ltd as a service contractor.

The other question is whether Edith Dindas Pty Ltd can simply vote again to appoint itself as the building manager. The above situation is analogous to a majority owner committing fraud on the minority by appropriating company assets to their own benefit. To prevent Edith Dindas Pty Ltd doing something similar in the future, the applicants seek an order requiring that the body corporate enter into a building management agreement with an independent contractor. In contrast, the respondents’ submit that any order should not restrict the appointment of a replacement building manager as this is a matter that should be put back to a vote at the general meeting. It is also submitted that an order can only be made about an actual exercise of a vote and not the way a vote may be cast in the future.

The decision to appoint any particular building manager is, in the absence of the appointment of an administrator, generally a matter for owners to determine. However, where a majority owner has previously used its voting power to gain a benefit for itself contrary to law, it seems appropriate to grant an order to prevent a repetition of the action. An adjudicator has jurisdiction to make an order that is just and equitable in the circumstances to resolve a dispute about the exercise of rights or powers under the Act (Standard Module, 276). I consider it just and equitable in the circumstances to make an order to prevent the repetition of an abuse of voting power at least in respect of the appointment of any replacement building manager. I note that the legislation precludes committee members from voting when they have a direct or indirect interest in an issue that may conflict with their duties (Commercial Module, 23). In this instance, I consider it appropriate to place a similar restriction on Edith Dindas Pty Ltd in respect of the exercise of its vote in general meeting for the appointment of a replacement building manager. I consider Edith Dindas Pty Ltd should still have a right to vote but subject to a prohibition that it must not exercise its vote in favour of itself or an associate. Further, it seems equitable that this limitation on the exercise of a vote should apply to all owners. I will therefore make an order that the body corporate refuse to accept votes from any owner that are in favour of appointing themselves or an associate as the replacement building manager.

Car parking is an issue that concerns all owners. However, as discussed above, the respondents acted to unreasonably deprive the committee of its function and owners were therefore deprived on input on this issue through their committee representatives. This issue was further complicated by requirements under the building management agreement that Edith Dindas Pty Ltd supervise car parking arrangements, and my declaration above affecting this engagement.

I have previously granted an interim order to prevent Edith Dindas Pty Ltd from carrying out a proposal to regulate car parking in its capacity as building manager or pursuant to any resolution at the proposed annual general meeting of 6 September 2004. Car parking arrangements at the scheme are relevant to all owners. This matter is one that could be expected to be discussed at first instance at committee level and, in all the circumstances, I consider it unreasonable for the respondents to act to unilaterally determine this manner in general meeting without an opportunity for discussion between committee members as representatives of all owners. It appears that the applicants previously thought there was little benefit in discussing this issue at committee level given the resolutions purporting to limit the functions of the committee and purporting to appoint Edith Dindas Pty Ltd as building manager. However, given the declarations that these resolutions were at all times void, I consider it appropriate to require the committee to make some form of decision regarding the regulation of car parking on the scheme.

The issue of car parking may be something that the committee can determine itself, though if it decides it is appropriate to engage a contractor for a period of at least a year to supervise parking arrangements then that would be a matter that should be referred by the committee to the general meeting (Commercial Module, 69). If such a matter was proposed then I would encourage all parties to discuss the relevant issues in detail before any motion was submitted to the general meeting in order to minimise the likelihood of future disputes.

While this does not necessarily mean that the car parking issue can be determined without the need for further intervention from an adjudicator, it will at least provide a starting point. If the committee puts a motion before the general meeting and that motion fails because of opposition that is considered to be unreasonable then an order can be sought to give effect to the motion as proposed (Act, 276 – Schedule 5). Alternatively, if the committee passes a proposal and the respondents consider this resolution by the committee to be unreasonable then the respondents can lodge an application seeking to overturn that resolution. The respondents could also overturn the committee resolution in general meeting and it would then be for members of the committee to lodge an application if they thought the respondents’ actions were unreasonable or if they considered it necessary to seek the appointment of an administrator to make decisions in place of the owners in general meeting.

The applicants allege that the respondents have been unreasonably opposing resolutions for the installation of mail boxes and directory boards on the scheme.

The respondents submit that they are not opposed to the installation of mail boxes or directory boards. However, the respondents do not wish to have mail boxes that are visible from the streetscape of the building as this will detract from the appearance of the scheme. In particular, the respondents claim that the particular place the applicants wanted to have mail boxes installed would reduce the exposure of one of the retail shops owned by one of the respondents.

Further, the respondents submit that it would be preferable to have one directory board rather than four directory boards as proposed by the applicants because visitors may be confused if the particular directory board they are viewing does not list all the occupiers. However, the applicants say that it is preferable to have one directory board at each of the four entrances to the scheme and that each of those directory boards would show all the lots.

Finally, the respondents submit that the proposed improvements are improvements to the common property for the benefit of the individual lot owners desiring the improvements and should not be installed at body corporate expense.

The legislation requires that the body corporate must maintain a mailbox clearly showing the body corporate’s name in a suitable position at or near the street alignment of the scheme or make suitable alternative arrangements for the receipt of mail (Commercial Module, 90). The applicant’s have made submissions regarding delays in Edith Dindas Pty Ltd distributing mail that indicate the body corporate has no suitable arrangement in place for receipt of mail and it seems unreasonable in the circumstances that owners do not have their own mailboxes. I am therefore prepared to order that the body corporate install mailboxes to which Australia Post can individually deliver mail for the lots.

The directory board is even less controversial with all parties supporting the addition of some form of directory. It appears that the dispute in this regard is largely due to lack of communication with the respondents expressing a concern that four separate directory boards would confuse people by not listing all occupants in one place but the applicants submitting that all lots would be shown on each of the four proposed directory boards. I accept submissions to the effect that visitors to the scheme regularly have difficulty in finding their desired location, particularly as there are four separate entrances to the scheme. It therefore seems unreasonable for the body corporate to continue to delay in erecting some form of directory for the scheme. I will therefore order that proposals to install some form of directory be submitted to the general meeting and that a proposal be adopted at that meeting. However, I would encourage the applicants and the respondents to attempt to reach a compromise solution by discussing any competing proposals prior to submitting them for consideration in general meeting.

The proposed improvements in the form of directory boards and letter boxes are of a nature that would ordinarily be made by the body corporate as a whole, with the form of those improvements being determined by the majority of owners (Commercial Module, 93). However, it is possible that a minority group of owners would gain the primary benefit of improvements of this type and, technically speaking, a minority group of owners could seek authorisation from the committee to make improvements of this nature for the benefit of their lots (Commercial Module, 94).

The submissions indicate that it would be unreasonable for the body corporate to continue to delay in adopting a proposal to erect separate mailboxes and some form of directory for the scheme. There are therefore two obvious choices for determining how the body corporate is to proceed. Firstly, the minority owners may put forward a proposal that they make some improvements for their own benefit and at their own cost. Alternatively, the majority owners may decide that the body corporate should make some improvements for the benefit of all owners at the body corporate’s cost. In that case, it would be important for the minority owners to accept that the owners of the majority of lots in the scheme have the greatest investment in the scheme and a right to make decisions about changes to the appearance of the scheme. Individual owners will be protected to the extent that a proposal must not unreasonably impact on their particular lot.

Given the circumstances, I will make an order requiring the applicants and respondents to put forward alternative proposals and for the body corporate to choose between the proposals at the general meeting. If the applicants consider that the body corporate has acted unreasonably in choosing a particular proposal in the context of any other proposals that are put to the general meeting then the applicants are entitled to bring an application on that basis.

Electricity to the scheme is supplied in bulk through one meter box and is then on-supplied to the various premises by Edith Dindas Pty Ltd.

The applicants claim that Edith Dindas Pty Ltd is refusing to provide them with her records regarding this supply of electricity and express a concern that Edith Dindas Pty Ltd may be contravening the Electricity Act 1994 by unduly profiting from the supply of this electricity.

The respondents claim that an adjudicator has no jurisdiction over this matter, that the contract of supply of electricity is by Edith Dindas Pty Ltd rather than the body corporate, and that the records in question are private business records of Edith Dindas Pty Ltd rather than body corporate records.

If individual owners wish to obtain their own electricity supply then those individual owners can seek permission from the body corporate to make any necessary improvements to the common property at their own expense to facilitate individual metering. Alternatively, the majority of owners may vote that the body corporate make improvements at body corporate expense to facilitate individual metering of electricity supply. A further alternative is that owners vote for an arrangement by which the body corporate obtains bulk electricity and then supplies individual owners. In that case, individual owners must agree to the supply and the body corporate can only charge for the supply to the extent necessary for reimbursing the body corporate for supplying the services (Commercial Module, 99).

However, the applicants’ submissions do not satisfy me that they have endeavoured to resolve the electricity supply arrangements themselves or that any orders in relation to electricity supply are justified. As a first step, I would encourage all owners to discuss the options between themselves and put any relevant proposals before the committee or the body corporate in general meeting.

It is, however, necessary to make a comment in relation to the submission from the respondents to the effect that the electricity is being supplied by Edith Dindas Pty Ltd on its own behalf rather than by the body corporate. It does not seem possible for Edith Dindas Pty Ltd to supply electricity throughout the scheme without making use of common property utility infrastructure. This common property utility infrastructure is owned by all owners as tenants in common. Owners can use this utility infrastructure for their own purposes. However, the Act prohibits the grant of exclusive use to an owner of common property utility infrastructure and the body corporate is not able to lease or licence utility infrastructure that is common property (Act 177, Act 154, Commercial Module 91). If Edith Dindas Pty Ltd were to supply electricity to other owners on a private basis rather than on behalf of the body corporate then this would be making special use of the utility infrastructure that would amount to a de facto licence. It seems likely that Edith Dindas Pty Ltd would be treating body corporate property as its own, and also depriving any other owner of the ability to use body corporate infrastructure to obtain bulk electricity from a different person. This may amount to unreasonable interference with the use or enjoyment of the common property.^[13]

It is not clear on the material before me whether Edith Dindas Pty Ltd is supplying electricity on behalf of the body corporate or has taken personal responsibility to supply electricity to the other owners on what terms or with personal liability for interruptions to supply. It is questionable whether there is any dispute regarding electricity supply over which I have jurisdiction pending an owner putting forward a motion either seeking that supply of electricity be transferred into the body corporate’s name or that owners arrange their own individual supply. I certainly have no jurisdiction to determine whether there has been any contravention of the Electricity Act 1994. I will therefore refrain from making any order regarding electricity supply at this time.

For these reasons, I make the orders listed above.

I strongly emphasise to all owners the importance of self management and the potential benefits if owners are able to negotiate solutions that most owners are willing to live with before those proposals are put to the committee or general meeting for formal consideration.
However, I also wish to emphasise the importance of putting proposals to the committee or general meeting for formal consideration before attempting to bring an application to the effect that the committee or general meeting is acting unreasonable. For committee meetings in particular, it is likely to be beneficial to all parties if meetings are held regularly and proposals are discussed between all members present rather than voted upon by flying minute.

Even if it becomes necessary to appoint an administrator then I would be very reluctant to appoint an administrator with all the powers of the body corporate as this would deprive owners of any real decision making power in relation to their scheme. However, it may be appropriate to appoint an administrator with all the powers of the body corporate for one particular purpose, for example to make decisions regarding the regulation of parking on the scheme.

Alternatively, if future applications disclose continued evidence of the committee failing to function then it may be appropriate to appoint an administrator with only the powers of the committee. Or, if there is further evidence of the body corporate in general meeting acting unreasonably then it may be appropriate to make an order appointing an administrator with only the powers of the body corporate in general meeting.

Any future application seeking the appointment of an administrator should state the powers and purpose requested, provide the consent and costs of an appropriately qualified person, and provide clear grounds justifying the appointment.

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

I hereby stay the operation of the following orders made on 12 January 2005 in respect of applications referenced 0266-2003, 0361-2003, 0682-2003, 0703-2003 and 0521-2004 concerning One Park Road Community Titles Scheme 2114:

"I further order that, at the AGM, the body corporate must vote to install mailboxes for each lot in a suitable position at or near street alignment of the scheme land, either:

(c) as an improvement to the common property for the benefit of the applicants, this improvement to follow a design proposed by the applicants and be at the applicants’ cost; or
(d) as an improvement to the common property made by the body corporate, according to a design proposed by the respondents and at the body corporate’s cost.

Within one month of the date of this order, the applicants and the respondents are both to ensure that they, or their representatives, submit a detailed motion to the body corporate manager showing the preferred design and cost of these proposals. Both motions are to be voted upon at the AGM and the proposal identified in the motion with the greater number of votes in favour according to a poll must be implemented within two months of the AGM.

I further order that, at the AGM, the body corporate must vote to install a directory board or boards in a suitable position, either:

(c) as an improvement to the common property for the benefit of the applicants, this improvement to follow a design proposed by the applicants and be at the applicants’ cost; or
(d) as an improvement to the common property made by the body corporate, according to a design proposed by the respondents and at the body corporate’s cost.

Within one month of the date of this order, the applicants and the respondents are both to ensure that they, or their representatives, submit a detailed motion to the body corporate manager showing the preferred design and cost of these proposals. Both motions are to be voted upon at the AGM and proposal identified in the motion with the greater number of votes in favour according to a poll must be implemented within two months of the AGM."

I further order that this stay operates until the outcome of the appeal of the orders is decided, or until the appeal is otherwise discontinued, or until the stay is amended or revoked by further order, whichever is the earliest.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0521-2004A

"One Park Road" CTS 2114

Edith Dindas and Edith Dindas Pty Ltd (applicants) have provided a copy of a notice of appeal filed in the District Court of Brisbane.^[14] This appeals the orders of an adjudicator made in respect of the scheme on 12 January 2005 under Part 9 of Chapter 6 of the Body Corporate and Community Management Act 1997 (Act).

These orders are:^[15]

The applicants’ submissions are to the effect that a stay of the orders should be granted to protect the applicants’ rights pending the outcome of the appeal. Reference is made to a decision of the Court of Appeal^[16] indicating that a stay will be granted if success on appeal would be rendered nugatory if the order appealed is not stayed. It is submitted that the applicant should, and can, demonstrate that:

The extent to which these principles apply to an administrative decision, albeit of a quasi-judicial nature, is not clear. In particular, I do not consider it necessary or appropriate to enter into any detailed examination of whether there is a good arguable case on appeal. Section 291 allows for a stay "to secure the effectiveness of the appeal" and in determining whether to grant a stay I will base my decision primarily on whether the stay is necessary to prevent implementation of the orders defeating the efficacy of the appeal. However, I do consider it relevant to take into account any competing disadvantage between the parties and whether the applicants’ disclose some genuine ground of challenge in respect of any order for which a stay is being sought.

The applicants seek a stay of all of the orders made. These orders are contained in ten separate paragraphs with the third, seventh and eighth paragraphs containing two orders each. I will consider the applicants’ request for stay of orders in respect of each paragraph in turn.

Paragraphs 1 and 2 comprise orders declaring two resolutions of the body corporate to be void. These resolutions purported to limit the committee to making decisions involving spending of no more than $500 and purported to give the majority owners an opportunity to veto committee decisions without the necessity of calling a general meeting.

I have declined to grant a stay of these declarations. Firstly, I question the ability to stay or the effectiveness of any stay of a declaration that a resolution was void. I gave the parties an opportunity to provide further submissions on this issue and received submissions from the applicants’ representative and the representative of the majority of the respondents. The applicants’ representative made submissions to the effect that there is a distinction between a "stay of execution" and "stay of operation" of a judgement. He made reference to the case of Re: Brent Hughes; Ex Parte: Westpac Banking Corp^[17] where it was considered that a stay of execution of a judgement does not affect the operation of the judgement. It was submitted that it follows from this that a stay of operation would prevent a judgement or order from being of any operative effect. The applicants’ representative sought a stay of operation of the declarations which was submitted to effectively mean that, for the duration of the stay, the declarations would be taken not to have been made.

The representative of the majority of the respondents made a brief submission to the effect that this case cited by the applicants’ representative is not authority for the proposition that declarations have no operative effect for duration of the stay. It was submitted that, once declared void in law, motions and agreements cannot in effect be treated as if they were not void for the duration of the stay.

As a matter of principle, I have concluded that I cannot stay the particular declaratory orders in question and that these orders do not give rise to any rights for which I should grant a stay. In this respect, I refer to The Roosters Club In v The Northern Tavern Pty Ltd & Anor [No 2]^[18], a decision of the Full Court of the Supreme Court of South Australia concerning a request for a stay of a declaration that the grant of a gaming machine licence was void. In the decision, reference was made to the conceptual difficulty of a court being able to stay what it has already declared.^[19] The Chief Justice stated "The grant of a stay cannot confer immunity from the consequences of an ultimate decision that the grant of the licence is void, in respect of the period between the grant of the licence and the making of that ultimate decision. If the ultimate decision is that the licence is void, it has been void from the outset. The Court cannot, by granting a stay, avoid whatever consequences may flow from that result, in respect of the period pending the ultimate decision...If my view is correct, there is no point in ordering a stay. The appellant must decide whether it will continue to operate the gaming machines in question, and must accept whatever consequences flow from that decision. The court is unable to protect it against the consequences that will flow, in respect of the period pending an ultimate decision, by the grant of a stay".^[20] Reference was also made to Bunnings Forest Products Pty Ltd v Bullen^[21] in which the Court made reference to the distinction between staying a declaratory order where the legal rights or obligations of the parties are settled subject to appeal compared with the stay of separate proceedings that are based upon the declaratory order.^[22]

In any event, I would decline the substance of the relief sought by the applicants on the basis that there is a need for the body corporate to continue to function pending the outcome of the appeal. The risk of committee functions being unduly restricted during this period appears greater than the risk of the committee making decisions that unduly prejudice the applicants. This conclusion is based on the applicants’ opportunity to independently seek orders preventing the committee from implementing any particular resolution that unreasonably prejudices their interests and on the applicants’ ability to call a general meeting to overturn the particular committee decision. The applicants have not satisfied me that failure to grant a stay of these orders is necessary to secure the effectiveness of the appeal.

I note that submissions on behalf of the applicant included concerns that the committee may rely on these declarations with impunity to engage in unlimited spending that is to the significant detriment of the applicants. However, I would expect that a prudent committee, aware of the appeal and possibility of a rehearing before the District Court, would be reasonably circumspect with any spending that was not absolutely necessary for the proper management of the body corporate. In any event, there is a real limitation on spending by the committee in respect of budgets adopted in general meeting and the need for special resolutions by ordinary resolution should there be inadequate provision for a liability in the budget. The applicants’ rights appear sufficiently protected through an opportunity to seek orders from an adjudicator regarding any particular spending approved by the committee and through involvement in any general meeting resolutions to set budgets for body corporate expenditure, set special levies, or overturn committee resolutions.

For the reasons above, I have concluded that I cannot stay the declaration that the resolution appointing Edith Dindas Pty Ltd was void. Further, I do not consider it appropriate, or necessary to secure the effectiveness of the appeal, that I grant a stay of the order that prohibits Edith Dindas Pty Ltd voting on a resolution to appoint itself as building manager.

In this respect, the issue in question is whether Edith Dindas Pty Ltd was lawfully appointed as building manager for a period of up to 25 years. The main step required to preserve the effectiveness of the appeal is to ensure that the body corporate does not appoint a replacement building manager for a significant term that will effectively prevent Edith Dindas Pty Ltd being reappointed even if successful on appeal.

Appointment of any replacement building manager for a term of over one year will require the passing of an ordinary resolution (Act 15, Commercial Module 69). The order in this paragraph does not prevent the applicants exercising their voting power to prevent such an appointment. Therefore, it is difficult to see how a stay of this order is necessary to secure the effectiveness of the appeal given the applicants can prevent the appointment of anything but an interim building manager.

To the contrary, a stay of these orders would allow the applicants to exercise their voting power to pass a resolution that the body corporate appoint Edith Dindas Pty Ltd as building manager for up to 25 years (Commercial Module, 66). This would significantly disadvantage the respondents should the appeal be unsuccessful.

Submissions on behalf of the applicants were to the effect that even an interim appointment of an alternate building manager could result in an award of damages if the applicants are successful on appeal. However, this submission does not satisfy me that a stay is necessary to secure the effectiveness of the appeal. Obviously any requirement to pay compensation on a successful appeal would be of some detriment to all owners but of significantly less detriment to minority owners than if the appeal was unsuccessful but Edith Dindas Pty Ltd had been permitted to vote itself into a long term contract costing significantly more than competitors’ quotes. Of course, even as an interim measure the committee could minimise any exposure to compensation by making any interim appointment determinable immediately upon a successful appeal or even by appointing Edith Dindas Pty Ltd to provide the building management services in the interim.

For the reasons above, I have concluded that I cannot stay this declaratory order.

In any event, I note that the proposed car parking arrangements have not commenced and it seems unnecessary to grant an order allowing new arrangements to commence as a means of securing the effectiveness of the appeal. Again, a failure to grant a stay does not mean that the committee has the power to implement any long term arrangements that would substantially defeat the efficacy of the appeal and the committee could limit any potential detriment to owners by making any interim arrangements determinable upon a successful appeal.

These orders concerned a committee meeting required to be held by 12 February 2005. This committee meeting had already been held prior to the applicants providing their request for a stay on 24 February 2005. As these orders have already been put into effect it is unnecessary to grant any stay of these orders.

These orders provided for the election of committee members and limited Edith Dindas, Edith Dindas Pty Ltd and any associates to nominating only one individual for committee membership between them.

To a large extent these orders have already been put into effect as only seven committee members have been nominated by owners meaning that these persons would automatically be appointed to the committee with no need for a ballot. However, the applicants’ representative proposed that the applicants be permitted to nominate and vote for additional persons for committee membership from the floor of the annual general meeting scheduled for later today.

I have some concerns about the practicality of this suggestion given that some owners may have already submitted their written voting paper in accordance with the legislation and may not be intending to attend the annual general meeting personally to vote. This concern may be mitigated to some extent given that the applicants hold sufficient voting power to dominate any election in general meeting anyway. However, I have greater concerns about how this may affect the body corporate pending the outcome of the appeal and whether it is necessary to grant a stay of these orders to secure the effectiveness of the appeal.

The scheme of the legislation and the explanatory notes make it clear that the committee is intended to be representative of owners and take responsibility for the day to day management of the scheme. If the majority owner was allowed to nominate enough persons to comprise the entire committee and elect those persons to committee membership then the remaining owners would be deprived of any role on the committee pending the outcome of the appeal. This detriment seems greater than any detriment to the applicants from being limited to only one representative on the committee. Further, it does not seem necessary to grant a stay of this order to secure the effectiveness of the appeal given the applicants have the opportunity to challenge any particular decision of the committee that they consider may prejudice the outcome of the appeal.

I therefore decline the applicants’ request for a stay of these orders.

The committee had failed to function effectively and failed to ensure that the body corporate complied with its legislated obligation to hold an annual general meeting for the 2003-2004 financial year. I had therefore ordered that the committee require the annual general meeting to be called and the orders in this paragraph are to facilitate the holding of that meeting. The parties confirmed that the general meeting is intended to be held at 5pm today subject to any stay granted pursuant to this application.

I expressed some concerns about whether it is necessary to stay this order to secure the effectiveness of the appeal and concerns regarding the consequences to the body corporate if it were not to continue to function pending the outcome of the appeal. The applicants’ representative has conceded that there are important matters to be considered at the proposed meeting, including the setting of budgets, and has withdrawn the request that these orders be stayed.

These orders require the body corporate to vote on alternative proposals for the installation of mailboxes and a directory board or boards. Assuming that an affirmative vote was recorded in favour of any of these proposals then the committee would need to take steps to implement the preferred proposal.

In this way, the orders would require the body corporate to undertake expenditure to make improvements to the common property. Generally speaking it would defeat the purpose of the appeal of these orders if the body corporate proceeded to make these improvements before the appeal was heard on whether the orders were properly made. While it is possible that orders could be made on appeal reversing these improvements, any order of this nature would detriment owners in terms of wasted effort and expenditure. Owners have operated without individual mailboxes and without a directory board for a number of years and I am satisfied that it is appropriate to stay these orders pending the outcome of the appeal.

For these reasons, I am satisfied that the orders in paragraphs 9 and 10 should be stayed. I consider this stay should operate until the outcome of the appeal is decided, or until the appeal is otherwise discontinued, or until the stay is amended or revoked by further order.

^[1] Explanatory Notes - Body Corporate and Community Management
Legislation Amendment Regulation (No. 1) 2003, page 6.
^[2] Gambotto v WCP Ltd [1995] HCA 12; (1995) 182 CLR 432.
^[3] Aleyn v Belchier (1758) 28 ER 634.
^[4] LGSS Pty Ltd v Egan, [2002] NSWSC 1171.
^[5] Houghton & Anor v Immer (No. 155) Pty Ltd (1997) 44 NSWLR 46, referring to Free Church of Scotland v Overtoun [1904] AC 515 at 695.
^[6] Lin & Anor v The Owners – Strata Plan No. 50276 [2004] NSWSC 88, referring to Vatcher v Paull [1915] AC 372.
^[7] Explanatory Notes - Body Corporate and Community Management
Legislation Amendment Regulation (No. 1) 2003, page 6.
^[8] Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 233.
^[9] Peters American Delicacy Co Ltd v Heath [1939] HCA 2; (1939) 61 CLR 457.
^[10] East Pont Du United Lead Mining Co v Merryweather (1864) 2 H&M 254.
^[11] Peters American Delicacy Co Ltd v Heath [1939] HCA 2; (1939) 61 CLR 457.
^[12] Independent Finance Group Pty Ltd v Mytan & Ors, District Court 3305/2000, Skoien DCJ, 7 March 2001 and Independent Finance Group Pty Ltd v Mytan Pty Ltd & Ors and The Body Corporate for Welsby Place Community Titles Scheme 24227, [2001] QCA 306, per Thomas JA at [34].
^[13] Platt v Ciriello [1997] QCA 33, 14 March 1997.
^[14] Notice of Appeal, District Court of Brisbane, BD559/05, dated 17 February 2005.
^[15] Orders 0266-2003, 0361-2003, 0682-2003, 0703-2003 and 0521-2004 concerning One Park Road Community Titles Scheme 2114, 12 January 2005.
^[16] Elphick v MMI General Insurance Ltd & Anor [2002] QCA 347.
^[17] Re: Brent Hughes; Ex Parte: Westpac Banking Corp [1997] 1324 FCA, 28 November 1997.
^[18] The Roosters Club Inc v The Northern Tavern Pty Ltd & Anor [No 2] [2003] SASC 143, 22 May 2003.
^[19] The Roosters Club Inc v The Northern Tavern Pty Ltd & Anor [No 2], at 18.
^[20] The Roosters Club Inc v The Northern Tavern Pty Ltd & Anor [No 2], at 22, 24.
^[21] Bunnings Forest Products Pty Ltd v Bullen [1994] FCA 1526; (1994) 54 FCR 342.
^[22] The Roosters Club Inc v The Northern Tavern Pty Ltd & Anor [No 2], at 44.

Number of Scheme:	2114
Name of Scheme:	One Park Road
Address of Scheme:	1 Park Road MILTON QLD 4064

•	The appointment of Edith Dindas Pty Ltd as building manager at a cost to the body corporate of approximately $61,600 per annum (inclusive of GST) to provide various services including supervision of maintenance, holding of keys, issuing of security cards, monitoring observance of the by-laws, supervision of car parking and various other duties;
•	The validity of two resolutions that limit the power of the committee to bind the body corporate;
•	The role of Edith Dindas as chairperson when a company in which she has an interest controls more than 50% of the votes that may be cast at a general meeting;
•	The lack of separate metering for the supply of electricity to owners;
•	The lack of separate letterboxes for tenants and the lack of a tenant directory board at the scheme; and
•	The proposed regulation of customer car parking at the scheme.

Owner	Lots	Contribution Entitlements	Interest Entitlements
Edith Dindas Pty Ltd	5, 6, 10-15, 17-26, 28, 30-33, 35-37, 40	7032	7032
Bentonic Pty Ltd	1	897	897
Chung Ming Su, Shu-Chen Lin Su	2	310	310
La Rosa	3	510	510
Kiara Holdings Pty Ltd	4	414	414
I-Ying Wang	7	420	420
Lee Chen, Chi-Chang Chen	8	530	530
Maxwell Dunstan, Guy Dunstan, Anthea Dunstan	9	460	460
Audax Australia Pty Ltd	16	180	180
Edith Dindas	27	198	198
Jimmy Ma, Verney Ma	29	160	160
Vanpost Pty Ltd	34	170	170
Werner and Annie Sauer	41	222	222

Number of Scheme:	2114
Name of Scheme:	One Park Road
Address of Scheme:	1 Park Road MILTON QLD 4064

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

One Park Road [2005] QBCCMCmr 21 (12 January 2005)