Saint Ives [2005] QBCCMCmr 395 (25 July 2005)

Last Updated: 19 July 2006

REFERENCE: 0506-2005

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27462
Name of Scheme:	Saint Ives
Address of Scheme:	77 Bamboo Avenue BENOWA QLD 4127

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

Exeter & Absolom, the Owner(s) of lot 26

I hereby order that, pending a final determination, the body corporate for Saint Ives must not rely on any resolution pursuant to motion 2 of the extraordinary general meeting to be held today as a basis for terminating the management rights agreement with Terrence Exeter and Kaye Absolom (applicants). This is an interim order and will remain in effect for a period of not longer than six months. It is the responsibility of the applicants to apply to extend this order if no final determination has been made within that period. This order will automatically lapse upon a final order being made or this application being withdrawn.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0506-2005

"Saint Ives" CTS 27462

Interim Application

Saint Ives Community Titles Scheme (Saint Ives) is a 30 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module).

This is an application for interim orders. It arises out of an application by Terence Exeter and Kaye Absolom, owners of lot 26 (applicants) seeking orders against the body corporate for Saint Ives Village (respondent).

The dispute concerns the validity of a statutory notice, committee meeting, and upcoming extraordinary general meeting that may be relied upon by the body corporate to terminate the engagement of the applicants as caretakers for the scheme. In this interim application it is necessary to consider whether to grant an interim order to prevent the body corporate terminating the management rights agreements pending a final determination of the validity of these matters.

Interim Orders Sought

The applicant seeks an interim order to stop the body corporate terminating the management rights agreements.

Submissions

The applicants have provided submissions to the effect that:

• The applicants received a letter dated 25 May 2005 requesting remedy of certain alleged breaches of the management rights agreements. The applicants considered this action unreasonable as the alleged breaches did not relate to their duties under the agreements and did not respond to all the requests. This letter does not amount to a remedial action notice under the Act as it does not state that if the notice is not complied with the body corporate may terminate the caretaking engagement;
• The chairperson, Nancy David, has no proper appointment as chairperson since she sold her lot. As a consequence, the committee meeting calling the upcoming extraordinary general meeting was not properly constituted; and
• The secret ballot envelopes were not addressed to the returning officer and a subsequent amendment of notice documents was only 14 days before the meeting. Therefore, insufficient notice of the upcoming extraordinary general meeting has been given.

Submissions on behalf of the body corporate are to the effect that:

• The letter dated 25 May 2005 raised breaches that are clearly drawn from the terms of the management rights agreement. It is unreasonable for the applicants to think that they do not need to remedy breaches when instructed by the committee to do so;
• The grant of a power of attorney to Nancy David was granted prior to the settlement of the sale of her lot. A copy of this power of attorney is provided. Nancy David’s term as chairperson has not expired; and
• The legislation does not specifically require the secret ballot envelopes to be delivered directly to the returning officer and in fact implies they can be given to the secretary and then provided to the returning officer.
• Decision

Urgent interim relief

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

The applicants are seeking an interim order to require a motion proposing to terminate their management rights agreements to be declared out of order or, alternatively, to require the body corporate to refrain from terminating their management rights agreements pending a final determination of the validity of the motion. To assist me in determining whether it is just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I consider it relevant for me to briefly consider whether the application raises any serious legal question.

If the application raises a serious legal question then it may be appropriate to preserve the existing state of affairs pending the final determination. It is relevant to consider whether the likely inconvenience should no interim order be granted outweighs any inconvenience likely to result from the interim order. In particular, it is relevant to consider whether an interim order is necessary to prevent something occurring that cannot be adequately redressed by final orders.

Serious legal question

The application does raise serious questions as to whether the body corporate has complied with all requirements of the legislation. One particular question is whether the body corporate has ever served the applicants with a "remedial action notice" that meets the requirements of a termination pursuant to the legislation (Accommodation Module 84B, 84C).

Any failure to serve a proper remedial action notice may prove irrelevant if the body corporate seeks to terminate the management rights agreement pursuant to the contractual terms of the agreement alone rather than relying on the statutory termination procedure. However, the body corporate would still need to pass an ordinary resolution to terminate the agreement based on its contractual terms (Accommodation Module, 84A).

In respect of the motion to be considered today, the applicants have raised a serious question about whether secret ballots should have been given directly to the returning officer (Accommodation Module, 51B(1)(e)). However, submissions should be heard in order to allow a final determination of whether any non-compliance was insubstantial, particularly due to the body corporate subsequently providing new secret ballot envelopes addressed directly to the returning officer. In this respect, the District Court has recognised that the very detailed provisions of the standard module regulation make it almost inevitable that from time to time there will be non-compliance with the legislation but that non-compliance of an insubstantial nature should not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken in good faith.^[1]

Inconvenience from an interim order

In considering whether to grant the interim order sought, it is relevant to balance the inconvenience caused by an interim order against inconvenience caused by waiting until a final determination to grant any necessary orders.

If the body corporate was allowed to terminate the applicants’ management rights agreement then it would be very difficult to make final orders rectifying the situation if the applicants were ultimately successful in showing that the termination was invalid. The applicants have raised serious questions regarding the motion and this justifies an order restricting the body corporate from acting on any resolution passed at the meeting today pending a final determination of the validity of that resolution. However, the motion may ultimately be determined to be validly put to owners so voting on the motion should proceed rather than an order being granted to rule the motion out of order.

Further, this order will not, of course, amount to an absolute prohibition on termination of the management rights agreements. If the body corporate subsequently calls a new meeting for which no serious questions about the validity of the meeting arise then the body corporate is free to act on any resolution passed at that meeting.

Order

For these reasons, I make the interim order above.

The application will be allowed to proceed to submissions and a final determination in the normal course.

^[1] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.