Pacific Plaza [2005] QBCCMCmr 383 (14 July 2005)

Last Updated: 19 July 2006

REFERENCE: 0092-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13550
Name of Scheme:	Pacific Plaza
Address of Scheme:	142 The Esplanade, SURFERS PARADISE Q 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Rabaqui Pty Ltd, the owner of Lots 10 and 11

I hereby order that Motion 17 "Replacement of Balustrades" resolved by special resolution at the Annual General Meeting dated 28 August 2004 was at all times void.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0092-2005

"Pacific Plaza" CTS 13550

APPLICATION

This application is by Rabaqui Pty Ltd, the owner of Lots 10 and 11 (applicant) against the body corporate (respondent). The applicant is seeking an outcome that Motion 17 passed at the Annual General Meeting dated 28 August 2004 (AGM) be declared void.

JURISDICTION

"Pacific Plaza" Community Titles Scheme 13550 is a scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

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)).

This is one of two dispute resolution applications lodged relating to Motion 17 passed at the AGM. The second application was made by Dianne Everett, the owner of Lot 66 (Ref. No. 0106-2005). Both applications will be determined concurrently and to a large extent, the Statement of Reasons will be similar for both matters.

The first matter to determine in respect of this order is one of jurisdiction. Section 242 of the Act provides that an application for an order declaring void a resolution of the body corporate in general meeting must be made within 3 months after the date that the resolution was passed. Section 242(3) provides that even if the application is made outside the three month time limit, the commissioner must deal with the application and an adjudicator to whom the application is referred may, for good reason, waive the non-compliance. The applicant initially made application which was received by the commissioner on 9 February 2005. On 15 February 2005, Frank Hemeter, on behalf of the commissioner, informed Roy Richter (representing the applicant) by telephone that he should explain why it has taken longer than three months to lodge the application. This information was confirmed by letter to the applicant dated 8 March 2005 which required that the application be amended. The amended application was received by the Commissioner on 18 March 2005. Roy Richter stated that the reason for the application being made outside the three month period was due to circumstances beyond his control namely:

1. He had to wait for documentation from the body corporate manager.
2. There was an unnecessary delay in the receipt of the form for making an application under the dispute resolution provisions of the Act.

In the appeal of Weeks v. Commissioner for Body Corporate (Maroochydore District Court Appeal 13/99), Judge Dodds made the following statement about the time limitation at pages 4 and 5 of the judgment:

"... the objects of the Act, for instance section 5(a) and (h) militate against too strict or legalistic a view about good reason for waiving non- compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the adjudicator that the time limit should be waived in all the circumstances."

The Court specified four issues (the length of delay; reason for non- compliance; effect of delay on others; and whether applicant entitled to relief) which might be examined by an adjudicator to determine whether there was good reason to waive the three month time limitation. It is not necessary that I evaluate each of the four criteria against the application.

On 12 July 2005, I conducted a teleconference with the parties to determine (amongst other matters) whether the disputed motion had been implemented in anyway. I have been assured by the parties to the application that Motion 17 has not been implemented, and that work the subject of Motion 17 has not yet been performed to the balustrades. I have also been informed that while the accepted quotation from Life Saver Pool Fencing & Gates Pty Ltd may still be current, no action has been taken by the body corporate with respect the resolution on Motion 17. Given that the issue of the replacement of the balustrades may, more than likely, require future consideration and determination by the body corporate, I am satisfied that the delay in making the application has not adversely affected the body corporate, and given the outstanding nature of this issue, it is sufficient in this instance to allow jurisdiction to proceed with the application.

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot (excluding the applicant) and the committee. A submission was received from the body corporate manager and a number of lot owners.

TELECONFERENCE

On Tuesday 12 July 2005 I conducted a teleconference attended by Roy Richter on behalf of the applicant, Dianne Everett, Barbara Bedwell (chairperson) and Dianna Butler for the body corporate manager.

The purpose of the teleconference was to clarify the implementation of the disputed motion, the current status of this matter, and some procedural issues relating to the AGM.

DETERMINATION

The applicant’s main submissions were to the effect that:

• The replacement of the aluminium balustrading on the building has been the subject of discussion and consideration since at least the 2002 AGM.
• Four unlike quotes for very dissimilar materials (3 for glass and 1 for aluminium) were presented to the AGM.
• The type of resolution for the motion was changed at the AGM to a special resolution, and if this decision was valid, the voting percentages indicate that the motion was defeated. The change to a special resolution was made as the motion was of importance and was causing much controversy.
• There has been much debate about the replacement of the balustrading and the resolution of the AGM does not support the advertised outcome.

Of the submissions made in response to the application, 5 supported the application and 3 opposed it.

Motion 17 on the agenda of the AGM related to the replacement of the balustrades. The Motion was included on the agenda as a motion with alternatives as there were four quotations submitted relating the replacement of the balustrades.

Section 42B of the Standard Module makes provision for a motion with alternatives and states, quote:

42B Motion with alternatives

(1) This section applies if 2 or more motions (the "original motions") proposing alternative ways of dealing with the same issue are submitted, under section 41, as motions for consideration at a general meeting of the body corporate.

Example for subsection (1)--

The secretary of the body corporate receives motions from 3 lot owners proposing the engagement of a person as a body corporate manager. Each motion proposes a different person.

(2) A voting paper for the general meeting must--

(a) list as alternatives under 1 motion submitted by the committee (a "motion with alternatives"), the substance of each of the original motions; and

(b) show, after the motion and each alternative listed under it, a blank space for voting purposes.

(3) A person who is a voter for the general meeting may vote either--

(a) for the motion, by voting for the motion and for 1 of the alternatives listed under the motion; or

(b) against the motion.

(4) If the required resolution is passed for the motion--

(a) the alternative with the most votes is the body corporate’s decision; or

(b) if 2 or more alternatives (the "qualifying alternatives") receive an equal highest number of votes--the qualifying alternative that is the body corporate’s decision must be decided by chance in the way the meeting decides.

(5) If more than 1 motion about the same issue is listed on the agenda, or stated in a voting paper, for the meeting, all motions about the issue are void.

Section 42A(4)(d) and (5)(b) of the Standard Module provides the requirements for a voting paper where the agenda includes a motion with alternatives, and states, quote:
42A Requirements for voting papers

(4) A voting paper must--

(d) if the voting paper is accompanied by an explanatory schedule including an explanatory note for a motion--state that an explanatory note for the motion is included in the explanatory schedule.

(5) The voting paper must state--

(b) for a motion with alternatives, each of the following--

(i) the motion and alternatives as required under section 42B;

(ii) the name and, if applicable, the lot number of the person submitting each alternative;

(iii) that the motion is submitted by the committee.

Section 42C(4) of the Standard Module makes provision for explanatory material to accompany the voting paper where a motion with alternatives is stated, and provides, quote:
42C Explanatory material accompanying voting paper

(4) The explanatory schedule must, for a motion with alternatives, include each of the following--

(a) each motion ("original motion"), the substance of which is stated as an alternative under the motion with alternatives, in the form in which it was submitted under section 41;

(b) an explanatory note about each original motion, given to the secretary by the submitter of the original motion, if the note is not longer than 300 words;

(c) an explanatory note stating that voters must vote either--

(i) for the motion, by voting for the motion and for 1 of the alternatives; or

(ii) against the motion.

Example of an explanatory note for subsection (4)(c)--

To vote on this motion, you must either vote against the motion OR vote for the motion and 1 alternative.

To vote against the motion--Mark ‘No’ opposite the motion on the voting paper. If you mark ‘No’, do not place a mark beside any of the alternatives. To vote for the motion and 1 alternative--Mark the voting paper in 2 places. Firstly, mark ‘Yes’, opposite the motion on the voting paper. Secondly, mark ‘Yes’ opposite the alternative you want to vote for. You can vote for only 1 alternative.

Given that the quotations related to alternative ways of dealing with the replacement of the balustrades, Motion 17 was included on the agenda of the AGM as a motion with alternatives (section 42B(1), Standard Module). I note that it is contended that a quotation or quotations presented to the AGM involved maintenance in the form of replacement of the balustrading using similar materials while another quotation or quotations effectively related to the body corporate making an improvement to common property, and that as a consequence, all the quotations should not have been included in the same motion. If this was the sole ground to the application, it would require further investigation and deliberation. However, given the material submitted for the application, I do not consider that this ground is fundamental to the determination of this dispute.

As is demonstrated by the above legislative references, the Standard Module specifies the procedures relating to a motion with alternatives. As the applicant has sought an outcome relating to the validity of Motion 17, an examination of the procedures adopted for the AGM is necessary.

The body corporate manager has provided a copy of the Notice and the Minutes of the AGM. These documents indicate that:

• The voting paper for the AGM listed the substance of each alternative under a motion submitted by the committee and otherwise complied with section 42B(2) and section 42A(5)(b)(i) and (iii).
• The voting paper did not include the information prescribed by 42A(5)(b)(ii). The voting paper did not include a reference to the explanatory schedule in accordance with section 42A(4)(d).
• The voting paper included general instruction about the procedure for voting on the motion and the alternatives. Section 42C(4)(c) requires the explanatory schedule to include information as to how to vote on a motion with alternatives. This requirement is essential given the unique voting procedures for such a motion. The explanatory schedule does not include any voting instruction other than a recommendation from the committee.
• The explanatory schedule includes a letter from Harold Palmer of Unit 30 dated 24 May 2004 requesting the replacement of the aluminium balustrades with glass balustrades. Also included was a quotation dated 19 May 2004 from Life Saver Pool Fencing & Gates Pty Ltd (Life Saver) to Harold Palmer to replace the balustrades with glass and white rails at a cost of $71 995.00, and a quotation dated 17 May 2004 from Pirie Enterprises Pty Ltd (Pirie) to Mark Jackson to replace balustrades with glass for $125 800.00 plus GST. The explanatory schedule does not include each motion as required by section 42C(4)(a).
• Motion 17 was determined in accordance with section 42B(4).

The Notice of the AGM provided by the body corporate manager included two of the four quotations presented to the AGM. The quotations from MD Aluminium were not included in this Notice. The inclusion of these quotations in the Notice of AGM distributed to lot owners was canvassed during the teleconference. It could not be categorically stated whether these quotations were or were not in the Notice. Given the fact that the quotations were the subject of a motion on the agenda of the AGM, the inclusion of the quotations in the Notice of the meeting was essential.

The Minutes of the AGM indicate that the type of resolution was changed from an ordinary resolution to a special resolution at the AGM. The applicant has provided reasons for this decision. The reason for the change in the type of resolution was based on an argument presented by Dianne Everett regarding the application of section 113 of the Standard Module to one or more of the proposed quotations. To my mind, such a change could conceivably be made where it is clear that the type of resolution was required by the legislation and where an owner’s consideration of the matter would not be affected in any way. The change should only have occurred if a special resolution was necessary due to the application of section 113 of the Standard Module "Improvements to common property by body corporate". I am not willing to make a decision on this issue at this time as I do not consider that this determination will affect the outcome of this dispute. However, I will state that the body corporate should carefully consider the application of this section if and when this matter is given further consideration. It should be noted that a special resolution is not necessary simply because the subject motion was of importance or was causing controversy amongst lot owners.

I consider that the matters of significance to the determination of this matter are the effect of the absence of proper instruction in the Notice of the AGM and the absence of comparable quotations.

Motion 17 provided four options relating to the replacement of the balustrades thereby activating the motion with alternatives provisions of the Standard Module which makes specific provisions to ensure that the options are properly put before lot owners and that owners are completely aware as to how they participate in the decision making process. In my opinion, it is significant that the voting paper did not include the name or names of the person or persons who submitted each alternative; the voting paper did not include a reference to the explanatory schedule; the explanatory schedule did not include each motion as required by section 42C(4)(a); and that, at best, broad the voting instructions were given to lot owners. Given the importance and the distinct possibility of dispute regarding the selected alternative, the non-compliance with these provisions has an effect on the validity of the Motion.

Notwithstanding these irregularities, in my opinion, what is fundamental to the determination of this matter is the absence of comparable choices. The voting paper lists each alternative as "glass with white rails", "glass", "framed glass" and "standard aluminium". The two quotations included in the Notice of the AGM do not appear to be for the same or similar work. The Life Saver quotation provides little detail regarding the installation and does not specify the position of the new balustrading and the standard of the proposed work. The Pirie quotation provides more detail and indicates that the new balustrading would be repositioned inside the hob of the balcony. Given the insufficient details in the quotations and the fact that the Pirie quote was costed at almost twice the cost of the Life Saver quote, I do not consider that these alternatives provide a comparable assessment of any of the proposed work. Such a comparison is necessary given that the proposed cost associated with each alternative was in excess of the relevant limit for major spending prescribed in the Dictionary of the Standard Module as "an amount worked out by multiplying the number of lots included in the scheme by $250". Given the proposed cost, section 104 of the Standard Module applies to the consideration of the alternatives. Section 104 relates to proposed work involving major spending and provides, quote:

104 Quotes for major spending

(1) This section applies if--

(a) a motion to be moved at a general meeting of the body corporate proposes the carrying out of work or the acquisition of personal property or services, including the engagement of a body corporate manager or service contractor, but not including the engagement of a service contractor who also is, or is to be, a letting agent; and

(b) the cost of carrying the proposal into effect is more than the relevant limit for major spending for the scheme.

(2) The lot owners must be given copies of at least 2 quotations for carrying out the work or supplying the personal property or services.

(3) If the motion is proposed by the committee, the committee must obtain the quotations.

(4) If the motion is not proposed by the committee, the person proposing the motion must obtain the quotations and give them to the secretary.

(5) Copies of the quotations or, if voluminous, summaries of the quotations and advice about where the complete documents may be inspected, must accompany the notice of the meeting at which the motion is to be considered.

(6) If, for exceptional reasons, it is not practicable to obtain 2 quotations, a single quotation must be obtained and must accompany the notice of meeting.

Example--

If goods to be acquired by the body corporate are obtainable from only 1 source, a quotation for supplying the goods must be obtained from the source and circulated with the notice of meeting. The fact that goods with the necessary characteristics are only obtainable from a single source would be an exceptional reason for not obtaining 2 quotations for the supply of the goods.

(7) Unless subsection (6) applies, the motion must be stated as a motion with alternatives in the agenda and on a voting paper for the meeting.

(8) Each quotation obtained under this section must be retained as an attachment to the minutes of the meeting at which the quotation is considered.

(9) For this section--

(a) the cost of engaging a body corporate manager or a service contractor includes any payment for the body corporate manager’s or the service contractor’s services, provided for under the engagement, for the term of any right or option of extension or renewal of the engagement; and

(b) if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for major spending for the scheme if the cost of the project, as a whole, is more than the relevant limit.

The proposed cost of each alternative is clearly above the relevant limit for major spending. As a consequence, it was necessary that the submitter of the original motion complied with section 104(3) or section 104(4). It is evident that Harold Palmer and Mark Jackson did not submit more than one quotation. However of more importance is the work proposed in each alternative as listed in the Motion and as stated in the quotations included in the Notice of the AGM (it is uncertain whether two of the four quotations were in fact included in the Notice). I am not satisfied, on the basis of the information presented, that lot owners were given sufficient disclosure of the proposed work to replace the balustrades. It is doubtful whether the Life Saver and Pirie quotations are comparable and there is only one quotation to replace the balustrades with standard aluminium balustrades. Section 104 requires at least two quotations to be presented for proposed work exceeding the relevant limit for major spending. In my opinion, these quotations must be comparable, and in the absence of such quotations, the Motion must fail.

For these reasons, I have determined that Motion 17 resolved at the AGM dated 28 August 2004 was at all times void.

I understand that Motion 17 has not been implemented in any way. I have also been advised at the teleconference that the body corporate has performed maintenance to the balustrades of 20 lots, and that the present view of the parties to this application is that the balustrades are being maintained in accordance with the body corporate’s obligations under section 109 of the Standard Module. The body corporate manager stated at the teleconference that the body corporate has allocated monies in the sinking fund for work on the balustrades in the near future. I would suggest that the committee ensure that the management of the maintenance of the balustrades is properly managed, especially given that the body corporate has been allocating funds for this purpose. A lot owner who considers that the balustrades should be replaced must ensure that the requirements of the legislation are satisfied when submitting a motion or motions in relation to any proposed work. For example, a lot owner must submit a motion in accordance with section 41 of the Standard Module, and if the cost of the proposed work is more than the relevant limit for major spending, the owner must give consideration to the requirements of section 104 of the Standard Module.