Raby Bay Harbour Apartments [2005] QBCCMCmr 375 (12 July 2005)

Last Updated: 19 July 2006

REFERENCE: 0413-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30944
Name of Scheme:	Raby Bay Harbour Apartments
Address of Scheme:	152 - 166 Shore Street West CLEVELAND QLD 4163

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

the Body Corporate for Raby Bay Harbour Apartments

I hereby order that the application by the body corporate for Raby Bay Harbour Apartments for a final order appointing an administrator to the Apartments Body Corporate until the body corporate has collected sufficient funds to be able to meet all of its debts; with the administrator to have all of the powers of the committee and the body corporate in general meeting, and for interim orders quote: 1. A declaration that Mr Allan Jones is not the appointed representative of the Apartments BC to the PBC and that Mr Jones is to cease representing himself as the chairperson or committee members of the PBC; 2. A declaration that the actions of Mr Jones in causing Heritage Building Society to freeze the bank account of the Apartments BC was not a valid act of the Apartments BC; 3. An order restraining Mr Jones from representing to third parties that he is a duly authorised representative of the body corporate unless he has such authorisation by resolution of the body corporate, is dismissed for the reason that the application, purporting to be on behalf of the body corporate, is not authorised by the body corporate for Raby Bay Harbour Apartments.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0413-2005

"Raby Bay Harbour Apartments" CTS 30944

The application

The applicant, the body corporate for Raby Bay Harbour Apartments has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote –

An order appointing an administrator to the Apartments BC until the body corporate has collected sufficient funds to be able to meet all of its debts. With the administrator to have all of the powers of the committee and the body corporate in general meeting.

The applicant body corporate as sought the following interim orders, quote:

A declaration that Mr Allan Jones is not the appointed representative of the Apartments BC to the PBC and that Mr Jones is to cease representing himself as the chairperson or committee members of the PBC.
A declaration that the actions of Mr Jones in causing Heritage Building Society to freeze the bank account of the Apartments BC was not a valid act of the Apartments BC.
An order restraining Mr Jones from representing to third parties that he is a duly authorised representative of the body corporate unless he has such authorisation by resolution of the body corporate.

The scheme

The scheme is a subdivision of 30 lots. The regulation module applying to the scheme is the standard module.

The dispute

The applicant body corporate seeks, by way of interim order, a number of declaratory and restraining orders relating to the conduct of the committee member, Allan Jones.

By way of final order, the applicant seeks an order appointing an administrator for certain purposes.

Jurisdiction and power to make orders

The application purports to be by the body corporate of Raby Bay Harbour Apartments against Allan Jones, a member of the committee. The application is signed by Herdlaw Solicitors.

The definition of "dispute" in section 227 of the Act allows for a dispute to arise between "the committee and a member of the committee". I am satisfied that jurisdiction prima facie exists for this dispute.

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

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

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

(c) a claimed or anticipated contractual matter about-

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

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

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

Section 279(1) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

I convened a teleconference of relevant parties regarding this application, and applications 399 and 412 of 2005 for Thursday 9 June 2005. That teleconference involved the following parties:

• Robert Herd of Herdlaw Solicitors, for the applicant body corporate;
• Pamela Neilson, Secretary of Raby Bay Harbour Apartments;
• Kent Beal, chairperson of Raby Bay Harbour Commercial Centre;
• Allan Jones, a committee member of Raby Bay Harbour Apartments and the named respondent.

It was indicated to all parties at the teleconference that it was in fact only a preliminary teleconference required to obtain clarity regarding certain aspects of not only this dispute application but two others also.

One aspect that did arise in respect of all three applications the subject of the teleconference was one of the "capacity" in which the application was made. This application is alleged to have been made by the body corporate. In the case of applications by the body corporate for a scheme, it is the usual practice of this office to require evidence by way of committee minutes of a resolution of the committee of the body corporate authorising the application. This is the minimum level of authorisation required by a body corporate in order to bring an application.

In the case of all three applications under consideration, authorisation for the body corporate to make the application was not provided as part of the material. It was clear in the context of the teleconference that there was dispute as to whether a valid committee meeting or flying minute had been held / carried authorising the application. I requested copies of the authorising committee minute.

On June 16, the solicitor provided a copy of the "flying minute signed by Glynn Foster, Pamela Neilson and Kent Beal". The flying minute provided, dated 2 June 2005, is in respect of the RBH Commercial Centre and not the body corporate in question, namely the RBH Apartments. From previous materials provided to this office, I understand the committee members of the Apartments Body Corporate appointed at the time of the AGM in June 2004 were:

Chairperson: G Foster
Secretary: P Neilson
Treasurer: A Jones

Committee: (ordinary members)

G. Johnson

D. Weigall

W. Lee

C. Bell

The flying minute provided to this office is signed by Glynn Foster, Pamela Neilson, Kent Beal and Bruce A Smith. Neither Beal nor Smith are members of the committee of the Apartments Body Corporate. This leaves two committee members out of seven purporting to make the application.

In the letter from Herdlaw enclosing the requested authorisation, it is stated:

It is the contention of Glynn Foster, Pamela Neilson and Kent Beal that the other two members of the committee had vacated their office by virtue of being absent without leave of the committee. This was acknowledged by Mr Jones, although he suggested the reason for this was that they did not receive any meeting notices.

In his submission in response to the application, Allan Jones (Jones) states in part:

... Apartments Committee members are only those voted in at the AGM. K Beal and B Smith are not on the Apartments committee. I am concerned that Herdlaw may be confused in this regard. The flying minute dated Thursday 2^nd June 2005, did not succeed.

... RBH Apartments committee have not passed a resolution at any meeting to issue a dispute resolution against me. The meeting held 18^th May 2005 is under dispute, ref number 0377 – 2005.

I consider that the authority on which the application is made is significantly in issue.

This scheme is currently the subject of significant disputation before this office. In another application, the specific issue of committee membership was in issue. In the Adjudicator’s reasons for decision in 0377 of 2005, the following statements were made by the adjudicator in his determination of that application, quote:

The dispute at hand relates to the appointment of a Mr Smith CPA to act as body corporate manager and to "do a full forensic examination of the financial affairs, documents and management since the inception of the body corporate in 2002" .
Mr Smith was purportedly appointed by an "emergency committee meeting" attended by the Chairperson Mr Foster and Secretary Ms. Neilson and Treasurer Mr. Jones at 12 Noon on Wednesday 18 May 2005. ...
Body corporate records provided to this Office state that the following persons were elected to the committee at the Annual General Meeting held on 21 June 2004:
Chairperson: G Foster
Secretary: P Neilson
Treasurer: A Jones

Committee: (ordinary members)

G. Johnson

D. Weigall

W. Lee

C. Bell

It is claimed that the meeting was convened without notifying all committee members. In particular, Messrs Jones, Lee, Bell and Johnson have stated in writing that the Secretary did not follow the requirements of the Act as they were not given the stipulated 7 days notice. ...

Also in support of the application the applicants have provided a copy of a letter from Mr Jones to Mr Foster dated 17 May 2005 which reads as follows:

I lodge a formal objection to this meeting proceeding as regulation 28 of the Standard Regulation Module has not been complied with.

I request that you call a properly constituted committee meeting for Raby Bay Harbour Apartments at a suitable place and time ensuring that all six members of the committee are invited as soon as possible.

However, subsequent to the meeting on 18 May 2005, a letter was distributed to all members of RBH Apartments which included the following statements:

I wish to inform you that Pamela Neilson (Secretary) and I have appointed Bruce Smith CPA as Finance Manager of our Body Corporate for an initial period of three months from 17 May 2005 in accordance with s.310 Body and Community Management act 1997. ....

At a teleconference convened with the parties to this dispute on 16 June 2005, I expressed concern that proper notice of the committee meeting had not been given as required by section 28 of the Body Corporate and Community Management (Standard Module) Regulation 1997. ... .

The respondents were not able to confirm that at least 7 days written notice of the meeting had been provided to the members of the committee and were not able to provide an indication of the total amount payable to Mr Smith.

Mr Foster expressed the view that Carolyn Bell and Greg Johnson were no longer members of the committee presumably pursuant to section 25(2)(d) of the Body Corporate and Community Management (Standard Module) Regulation 1997, as they had each missed two consecutive committee meetings This is disputed by Mr Johnson and by Ms Bell who has advised that she did not attend the meetings as she did not receive notice of meetings, did not receive minutes and had attended meetings as recently as April 2005 with the acquiescence of the Chairman.

Ms Bell has also raised the following concerns:

• Not all committee members were advised of the May 18 meeting;
• Only the chairperson, secretary, treasurer and Mr Lee were informed about the meeting and were not advised that it was a committee meeting;
• In any event 7 days notice was not given to the above;
• Proxies were not called for and therefore not taken into account;
• The terms of reference, responsibilities and role of Mr Smith were not detailed and therefore there is significant scope for him to do more than was originally intended. Potentially, his fees could exceed the relevant Committee spending limit of $125 x 30 (no. of lots).

... On the evidence provided, it would appear that Mr. Foster and Ms. Neilson have seen a need to act decisively in this regard by appointing Mr Smith, who is also undertaking an analysis of the accounts of the Principal Scheme.

... I am of the view that the relevant notices were not given to committee menmbers as required by section 28 of the Body Corporate and Community Management (Standard Module) Regulation 1997. ...

Further, the body corporate may wish to consider whether an extraordinary general meeting should be convened so that a committee can be elected and there is some certainty as to who is a member of the committee and therefore entitled to vote upon resolutions submitted to meetings of the body corporate committee. ...

In a second application (0399 of 2005) dealing specifically with the right of a committee member of this body corporate to receive notice of committee meetings and to be allowed to participate in committee meetings, I as the Adjudicator relevantly concluded:

In the circumstances, given the above evidence and other findings of the Adjudicator, and the failure of the named respondents to respond to the application, I conclude that the interim order sought by the applicant should, and in fact, needs be made.

I intend to order that, pending a final determination of this application, this application being withdrawn or this order being of no effect through operation of law, that in respect of all future committee meetings of the scheme, the secretary shall

(1)	provide to Carolyn Jean Bell due notice of all such meetings or other proceedings involving the committee members so as to allow Ms Bell to participate as a committee member;
(2)	to record and include the vote of Ms Bell in any deliberation of the committee such that Ms Bell’s vote is included in the determination of the outcome of any committee motion or other determination.

I conclude that the present application is not authorised. Given the nature of the evidence produced in the previous two applications, and which has not been challenged, I consider that it is more likely than not that proper notice of the committee meeting authorising this application was not given to all committee members, but instead to only those members (Foster and Neilson) and to two other persons not members of the committee for this scheme who were known to be in favour of the proposals the subject of the flying motions. I am satisfied on the balance of probabilities that had notice of the meeting / flying motions been given to all seven voting members of the committee, the two motions purportedly carried by way of flying minute on 2 June 2005 would not have been passed.

Even if I am incorrect on this aspect, I note the following requirement of section 35 of the standard module:

35 Voting outside committee meetings
(1) A resolution on a motion before the committee is a valid resolution of the committee, even though the motion is not passed at a meeting of the committee called and conducted under division 7, if--
(a) notice of the motion is given to all committee members or, in an emergency, as many members as it is practicable to contact; and
(b) a majority of all voting members of the committee entitled to vote on the motion agrees to the motion. (my highlighting)
(2) The notice must be given in writing, and the members’ agreement to the motion must be given in writing but, in an emergency, the notice may be given, and the member’s agreement expressed, orally or by another appropriate form of communication.
(3) Advice of the motion must be given, at the time notice of the motion is given or, in an emergency, as soon as reasonably practicable, to each lot owner, other than a lot owner who--
(a) has instructed the secretary that the lot owner does not wish to be given advice of committee meetings; and
(b) has not withdrawn the instruction.
(4) The notice and advice of the motion may be given by--
(a) the secretary; or
(b) another member of the committee who is authorised by a majority of voting members of the committee to give the notice and advice.
(5) For the operation of sections 34(1) and (2), 36(2) to (4) and 37, the committee, in dealing with a resolution under this section, is taken to deal with the resolution at a meeting of the committee.
(6) A motion voted on under this section must be confirmed at the next meeting of the committee held after the motion is voted on.

I conclude that the flying minutes of 2 June 2005 fail both requirements of section 35(1) in that there is no evidence that notice of the motions was given to all committee members or, even as many members as it is practicable to contact; and furthermore, that a majority of all voting members of the committee entitled to vote on the motion agrees to the motion.

The motions in question were purportedly carried by the vote of 2 members of the Apartments body corporate committee. This leave four committee members who did not vote. Section 35(1) requires a majority of all voting members agreeing to the motion. A majority of 7 is 4. The motions were not carried in compliance with section 35(1) and are invalid.

I conclude that the motions in question were carried by a minority of the members (2/7) of the committee in the knowledge that if all members were notified and allowed to vote, the motions would not have been carried. I conclude this on the basis that given the evidence available to me, it is my belief that a full committee still exists and that two of those members have not vacated their positions on the committee. I consider that Foster and Neilson have sought to "engineer" the make-up of the committee to achieve the outcomes which they support.

This application is dismissed as the application, purporting to be on behalf of the body corporate, is made without the authorisation of the body corporate via its committee. In the circumstances, there will be no further order to this application.