Victoria Square [2005] QBCCMCmr 252 (12 May 2005)

Last Updated: 5 July 2005

REFERENCE: 0167-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

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

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

Ms E Hart, the Owner of lot 5

I hereby order that Resolution 11 purportedly made at the Annual General Meeting held on 3 February 2005 is invalid and of no effect I further Order that the application for an order that Resolutions 8 and 9 purportedly made at the Annual General Meeting held on 3 February 2005 be declared invalid and of no effect, is dismissed.

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

"Victoria Square" CTS 5721

The scheme

"Victoria Square" is a subdivision of 76 lots registered as a building unit plan (now known as a building format plan) located at Broadbeach and contains a mixture of commercial and residential premises. The regulation module applying to the scheme is the Accommodation Module.

Application

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

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

Pending a final decision, an interim order was sought that the Body Corporate not incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolution 9 purportedly made at the AGM held on 3 February 2005. On 15 March 2005, I made an interim order that pending a final decision, the Body Corporate is not to incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolutions 8, 9 and 11 purportedly made at the AGM held on 3 February 2005.

Jurisdiction

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

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

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

(c) a claimed or anticipated contractual matter about-

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

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

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

Background

The applicant is the owner of lot 5, a ground level shopfront adjacent to the main entrance of the building which includes residential units on the upper levels. The majority of the 20 or so shops on this level are restaurants and food outlets, although lot 5 has previously been occupied by a travel agency and an interior design business.

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

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

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

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

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

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

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

The applicant claims that:

• Motion 8 purports to be authority for expenditure up to $350,000 by the Committee without a general meeting viewing at least 2 quotations as required by the Regulations.
• construction of shade sails would disadvantage the applicant’s shop premises as it would then be hidden from passing trade. As a consequence, the premises would be difficult to let and this would impact on the level of chargeable rent.
• The applicant believes that Motion 11 purports to authorise the Committee to decide which groups of owners will vote on a particular issue and strike special levies against some lot owners but not others.

On 10 May 2005 I inspected the ground floor of the development with a view to determining the potential impact of the proposed improvements. I noted that other lots in the vicinity of lot 5 are restaurants or take-away food and drink outlets, most of which also have tables and chairs in adjoining areas which are also covered by awnings/ canopies. Looking toward the development, it is noted that to the left of lot 5 is a wall with mail boxes and to the right is a seafood restaurant/ take away. Accordingly, lot 5 is in a somewhat obscure location and is not readily visible unless it is viewed "front on".

Submissions

Submissions were received from the Body Corporate Committee, an owner of a residential unit and owners of various ground floor lots.

The Body Corporate has responded as follows:

(1) Motion 8(a) was not in itself intended to amend the original Motion 8 but was a motion to amend a motion. This allowed those present to vote on whether a amended motion 8 could be put to the meeting. Motion 8(a) was carried and the amended motion "Upgrade to Residential Entrance" was put to the meeting.

(2) The amended motion 8 does not purport to empower the Committee alone to choose the contractor as it provides " ... with owners at a general meeting convened for the purpose of selecting the works contractor from two (or more) quotations submitted by the Committee".

(3) It was the original intention of the Body Corporate to erect an awning over the street frontage of lot 5. Although it was thought that this would enhance the shop frontage, the Body Corporate would not erect the awning outside lot 5 if the applicant is opposed to this. The awnings proposed for the vicinity of lot 5 are to replace existing structures while the remaining awnings/ shade sales are to be erected further along Victoria Avenue and are not visible from lot 5.

(4) Any work contemplated by Resolution 11 would be undertaken in accordance with the Act and Accommodation Module Regulation.

(5) The funding for the proposed work is to come from moneys deposited in the sinking fund following settlement of a protracted dispute with the builder of the scheme.

Individual owners have commented that the proposed improvements to the exterior appearance would attract more custom as the shops and apartments could then compete with the newer neighbouring developments. Further, since the original metal and plastic cover was removed, the court-yard area has been exposed to the elements with potential customers now avoiding the exposed area. The area is subject to flooding during heavy rain, giving rise to safety/ liability concerns.

In response, the applicant has reiterated her concerns that the wording of the resolutions lack clarity. She also notes the Committee’s undertaking not to erect an awning outside lot 5 but has concerns regarding the proposal to replace the canopied walkway with a permanent structure which could further reduce the visibility of her shop. Inquiries by this Office with the Body Corporate indicate that plans for the proposed extension have not yet been finalised.

Determination

The applicant is seeking an order that Resolutions 8, 9 and 11, purportedly made at the Annual General Meeting held on 3 February 2005 be declared invalid and of no effect. The applicant states that she is seeking this order owing to a number of ambiguities and uncertainties contained in the above motions.

Pending a final decision, I previously made the following interim order requested by the applicant:
that the Body Corporate not incur any cost or submit any applications to the Gold Coast City Council or other statutory authority, in pursuance of Resolutions 8, 9 and 11 purportedly made at the AGM held on 3 February 2005.

In the Interim Order I noted the applicant’s concerns regarding the extension and renovation work to the entry and lobby of the main building, including the absence of quotations for the work. I also raised concerns regarding the use of sinking fund monies for this purpose.

In response, the Body Corporate has advised that Resolution 8 does not purport to empower the Committee alone to choose the contractor as it provides for selection of the works contractor from two (or more) quotations submitted by the Committee. The Body Corporate has also advised that funding for the proposed refurbishment is to come from moneys deposited in the sinking fund following settlement of a dispute with the builder of the scheme.

At this point in time I do not see any point in ordering that Resolutions 8 and 9 be declared invalid and of no effect. As outlined above, Resolution 8 does not purport to empower the Committee alone to choose the contractor as it provides " ... with owners at a general meeting convened for the purpose of selecting the works contractor from two (or more) quotations submitted by the Committee".

In response to the applicant’s concerns that the erection of awnings and shade sails authorised by Resolution 9 would adversely impact on the use of her lot, the Body Corporate has advised that:

• it will not erect an awning outside lot 5 if the applicant is opposed to this;
• the awnings proposed for the vicinity of lot 5 are to replace existing structures; and

•	the remaining awnings/ shade sales are to be erected further along Victoria Avenue and are not visible from lot 5.

Notwithstanding the Body Corporate’s assurances that any work contemplated by Resolution 11 would be undertaken in accordance with the Act, I believe that there is some substance to the applicant’s concerns regarding Resolution 11 and believe that this resolution is void for uncertainty. As outlined in my interim order, this resolution appears to contemplate course of action which may contravene the Act. The scheme of Chapter 3, Division 4 of the Act contemplates that each lot in a scheme is entitled to a vote upon a motion and it is not open to the Committee to decide which groups of owners will vote on a particular issue and strike special levies against some lot owners but not others.

Finally, the applicant has raised concerns regarding the proposal to replace the canopied walkway with a permanent structure which could further reduce the visibility of her shop. Inquiries by this Office with the Body Corporate indicate that plans for the proposed extension has not yet been finalised. Accordingly, at this point in time, I do not propose to make an order regarding the proposed extension which is to replace the existing canopied walkway. Should a dispute arise between the applicant and the Body Corporate regarding the finalised plans for this structure, a further application can be submitted with this Office.

Orders

Having noted the submission by the Body Corporate and the undertaking of the Body Corporate not to erect an awning/ shade structure outside lot 5 against the wishes of the applicant, I do not propose to make orders invalidating Resolutions 8 and 9.

However I do believe that the wording of Resolution 11 is so uncertain as to render it void and of no effect. As outlined in my interim order, the scheme of Chapter 3, Division 4 of the Act contemplates that each lot in a scheme is entitled to a vote upon a motion and it is not open to the Committee to decide which groups of owners will vote on a particular issue and strike special levies against some lot owners but not others. Section 276(3) of the Act empowers an adjudicator to make an order which is just and equitable in the circumstances to resolve a dispute. The range of possible orders in schedule 5 includes an order that a resolution purportedly passed at a general meeting of the body corporate was at all times void.

It should be noted that the temporary interim order made on 15 March 2005 ceases to have effect as of the date of this Order.