Kangaroo Court [2005] QBCCMCmr 228 (28 April 2005)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Beverley Mort, the owner of lot 2

I hereby order that:

1. resolutions 8 (headed Reimbursement – Caretaking Service from 2003 to 2004) and 9 (headed Reimbursement – Secretarial Service from 2003 to 2004) carried at the AGM of the body corporate for Kangaroo Court on 30 September 2004, are invalid and of no effect.
2. the two agreements (Caretaking and Secretarial) purported to have been entered into between the body corporate and Samuel Vella at the 2002 AGM are invalid and of no effect on the basis of failure to comply with the requirements of section 87 of the Standard Module.
3. resolutions 11 (headed Prohibition as proxy) and 12 (headed Appointment of proxy) carried at the AGM of the body corporate for Kangaroo Court on 30 September 2004, are invalid and of no effect.

I further order that the application for orders that:

1. the body corporate is not liable to pay any monies to Samuel Vella in any way consequent upon resolutions 8 and 9 made at the AGM held on 30/09/04;
2. the body corporate shall not engage any owner in the scheme to provide caretaking or secretarial services to the body corporate for remuneration other than reasonable out of pocket expenses incurred in undertaking authorised services;
3. Resolution 3 made at the AGM held on 30/09/04 be varied to provide that the aggregate Administration Fund levy contributions for the current financial year ending 30/06/05 be reduced from $2400 to $1200, that the levies payable by each unit be $300 for that period and that any contribution instalment paid by 30/11/04 by any lot owner be appropriated towards the first levy contribution for the 2005/06 financial year,

are dismissed, on the basis that such orders are unnecessary or inappropriate.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0827-2004

"Kangaroo Court" CTS 13331

The applicant, Beverley Mort, the owner of lot 2, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote:

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The scheme is a subdivision of 4 lots recorded under a building unit plan of subdivision. The regulation module applying to the scheme is the standard module. There are two owners in the scheme:

The dispute concerns the validity of 4 motions / resolutions purportedly carried at the AGM of the body corporate held on 30 September 2004 (the meeting). Resolutions 8 and 9 purport to authorise the reimbursement to the respondent of certain charges alleged to be payable under a Caretaking Agreement and a Secretarial Service Agreement. Resolutions 11 and 12 relate to the use of proxies at general meetings of the body corporate.

The history of the scheme is one of continuing disputation between the parties. This is the 6^th application in 6 years. As part of my investigation of the application, and because of the continuing disputation between the parties, I elected to convene a meeting between myself and the parties. This meeting was held on Wednesday 27 April 2005, and consisted of myself, both identified parties and the wife of Mr Vella. This meeting continued for the best part of 1.5 hours, and canvassed most aspects of the application including but not limited to:

It is not possible to restate in detail the matters discussed, and I do not intend to do so. I consider the parties could be left with no uncertainty as to the reasons for the determinations which I made. These determinations were fully explained, and in some instances, several times so there could be no misunderstanding of the basis for the determination.

The dispute can effectively be broken into two separate components. The first is the validity of the two agreements. The respondent was seeking reimbursement under two agreements which he purportedly entered into with the body corporate at the 2002 AGM. The applicant disputes the validity of these two agreements, and consequently, the requirement for the body corporate to reimburse the respondent. The applicant relied on two arguments. That the agreements were unlawful in that they did not comply with the requirements of section 87 of the Standard Module in that the applicant did not receive a copy of either agreements as part of the notice of meeting for the 2002 AGM. Whilst the applicant now has knowledge of these two agreements, she denied receiving these as part of the notice of meeting for that year. This aspect was confirmed in the report of the meeting provided by the proxy of the applicant, Mr Danieletto.

The respondent denied that the applicant had not received a copy of the agreements. However, I referred to respondent to relevant statements in his own submission – relevantly, page 2 second para, quote:

Section 87 of the standard module provides:

87 Authority to make engagement or give authorisation, or amend engagement or authorisation
(1) The body corporate may--
(a) engage a person as a body corporate manager or service contractor; or
(b) authorise a person as a letting agent; or
(c) agree to an amendment of an engagement or authorisation mentioned in paragraph (a) or (b).
(2) The body corporate may act under subsection (1) only if--
(a) the body corporate passes an ordinary resolution approving the engagement, authorisation or amendment and, for the passing of the resolution, no votes are exercised by proxy; and
(b) the motion approving the engagement, authorisation or amendment is, for any of the following, decided by secret ballot--
(i) an authorisation of a person as a letting agent;
(ii) an engagement of a person as a service contractor if the person is to be a caretaking service contractor;
(iii) an agreement to amend a person’s engagement as a service contractor, or a person’s authorisation as a letting agent, to include a right or option of extension or renewal; and
(c) the material forwarded to members of the body corporate for the general meeting that considers the motion approving the engagement, authorisation or amendment includes--
(i) for an engagement or authorisation--the terms of the engagement or authorisation, including--
(A) when the term of the engagement or authorisation begins and ends; and
(B) the term of any right or option of extension or renewal of the engagement or authorisation; and
(ii) for an agreement to amend a person’s engagement as a service contractor, or a person’s authorisation as a letting agent, to include a right or option of extension or renewal--an explanatory note in the approved form explaining the nature of the amendment; and
(iii) for another agreement to amend an engagement or authorisation--the terms and effect of the amendment.
(3) However, subsection (2)(b) does not apply if all the lots included in the scheme have identical ownership.

It is clear to me, on the respondent’s own admission, that the copies of the agreements were provided to the applicant’s proxy at the meeting in question, and not, as required, as part of the notice of that meeting. I then went on at length to discuss the significance of this requirement; in particular that the copies of the agreements were provided with the notice of meeting and voting paper so that an owner might inform themselves prior to the meeting in question of the content of the agreement and made a determination of how to vote in respect of the agreement. The provision of the agreement at the meeting, and not as part of the notice of meeting, meant that the applicant had no opportunity to make an informed decision on the agreements. I concluded that this was an important requirement of the legislation which could not be overlooked. I concluded that the agreements must be declared to be invalid and of no effect. Further, I concluded that the body corporate was under no obligation to reimburse the respondent on the basis of the agreements.

The respondent went on at length stating that he had, for two years now, undertaken the work, and deserved to be paid. I indicated to the respondent that whilst I empathised with his position, and did agree that it was likely that the work had been undertaken and that this had resulted in an improved appearance and maintenance of the units, the fact remained that an important requirement of the legislation had not been complied with. I note that the only aspect of the caretaking agreement which the applicant significantly challenged the requirement for was that of the putting out of bins, indicating that her tenant was required to put out their own bin. However, I indicated that this was a grey area, and that it was often made the responsibility of a site manager or caretaker to put out bins for several reasons including:

The applicant further sought to indicate that certain charges under the agreements were excessive, and in one instance provided a quote for lawn mowing of $17 per attendance. I note the quote was dated almost 2 years ago. I consider that the agreement provided for much more than simply lawn mowing, and further that I considered, from photographic evidence, that there had been a beneficial improvement in the state of the common property in the recent period. Further, I consider that it was unreasonable to expect that services provided by an owner would be provided without reasonable fee. If an owner did not undertake the work, then the body corporate would have to employ someone to undertake the work. This basically was the second ground of objection to the validity of the agreements raised by the applicants: that the agreements in their terms were unreasonable and manifestly inappropriate. For the above reasons, and more which I explained to the parties, I conclude that it is the attitude and expectation of the applicant which I consider to be somewhat unreasonable in the circumstances.

The total per annum charge to the body corporate for the services provided by the respondent under the two agreements is $1200. The applicant pays one quarter of this amount or $300. This equates to a per week charge to the applicant of approx $5.77 for both common property maintenance services and secretarial / administrative services. The applicant, in her material, states that "Mr Vella’s intended charges are manifestly excessive". I completely disagree with this. Provided that the services as set out in the agreements are in fact provided, then I consider that the fee of $300 pa or $5.77 is manifestly and completely reasonable, and that in fact it is the applicant who is being unreasonable, and is expecting services to be provided for nothing.

The applicant has not alleged in her material that the services have not been provided, or that they are not up to standard. I observed that the photographic evidence suggests that the provision of the services has improved the aesthetic appearance of the scheme, and the respondent stated that the applicant had been able to increase her rent in consequence of this. This statement was not confirmed. However, it is the case that if these services were not provided by the respondent, the body corporate would need to engage contractors I suggest, at more expense, organisational time, and supervision. All in all, I consider that the applicant is receiving a definite benefit from the provision of services by the respondent, and that the applicant should adopt a somewhat more conciliatory and positive attitude towards this aspect. In particular, I find no evidence to support the applicant’s statement that "it is unreasonable and manifestly inappropriate for the body corporate to engage Mr Vella as the caretaking service contractor ... for remuneration". Rather it is the applicant I consider who appears to be acting unreasonably.

There were statements made by the respondent at the meeting that the applicant had in fact, in a mediated agreement, agreed to pay the respondent under the terms of the agreements, but that the applicant had then reneged on that mediated agreement. At the meeting the applicant remained silent on this aspect, and I did not consider the terms of the mediated agreement on the basis that it had not been made the terms of a consent order between the parties, which would then have been enforceable. However, the very statement, not denied by the applicant, suggests to me that the applicant acknowledges that the services have been provided for approximately 2 years now, and that morally and reasonably, the respondent is entitled to recompense for his services. I indicated to the applicant that whilst she might legally not be required to make such recompense on the basis of the agreements being invalid, I suggested to her that failure to do so might be considered unreasonable by most persons. I indicated to the applicant that this was a matter I would leave for her to consider.

The second issue related to resolutions 11 and 12, headed Prohibition as proxy and Appointment of Proxy. I promptly indicated that both these resolutions were invalid and the respondent acknowledged this. Specifically, the legislation did not allow the body corporate to prohibit an owner being represented by a particular proxy, or did not authorise the committee to approve the proxy of an owner. Rather, what the legislation allowed was the body corporate, by special resolution, to prohibit the use of proxies either altogether or for particular things (see section 72(2) of the standard module).

The basis why the respondent sought to prevent the applicant’s proxy, Mr Danieletto, from representing the applicant was discussed. Both parties are alleging intimidation or oppression by the other. I indicated my views on this matter. The position is that subject to a special resolution being carried prohibiting proxies, then the applicant was entitled to be represented at any meeting by the proxy of her choosing. At such meeting, it was the role of the chairperson to control the behaviour of persons attending the meeting, and that all persons attending the meeting should act in an appropriate way.

As for the orders sought by the applicant, I intend to order as follows:
That resolutions 8 (headed Reimbursement – Caretaking Service from 2003 to 2004) and 9 (headed Reimbursement – Secretarial Service from 2003 to 2004) carried at the AGM of the body corporate for Kangaroo Court on 30 September 2004, are invalid and of no effect.
That the two agreements (Caretaking and Secretarial) purported to have been entered into between the body corporate and Samuel Vella at the 2002 AGM are invalid and of no effect on the basis of failure to comply with the requirements of section 87 of the Standard Module.
That resolutions 11 (headed Prohibition as proxy) and 12 (headed Appointment of proxy) carried at the AGM of the body corporate for Kangaroo Court on 30 September 2004, are invalid and of no effect.

I further order that the application for orders that:
the body corporate is not liable to pay any monies to Samuel Vella in any way consequent upon resolutions 8 and 9 made at the AGM held on 30/09/04;
the body corporate shall not engage any owner in the scheme to provide caretaking or secretarial services to the body corporate for remuneration other than reasonable out of pocket expenses incurred in undertaking authorised services;
Resolution 3 made at the AGM held on 30/09/04 be varied to provide that the aggregate Administration Fund levy contributions for the current financial year ending 30/06/05 be reduced from $2400 to $1200, that the levies payable by each unit be $300 for that period and that any contribution instalment paid by 30/11/04 by any lot owner be appropriated towards the first levy contribution for the 2005/06 financial year,
are dismissed, on the basis that such orders are unnecessary or inappropriate.

Number of Scheme:	13331
Name of Scheme:	Kangaroo Court
Address of Scheme:	30 Leonard Avenue SURFERS PARADISE QLD 4217

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kangaroo Court [2005] QBCCMCmr 228 (28 April 2005)