Federation Court [2005] QBCCMCmr 509 (12 September 2005)

Last Updated: 19 July 2006

REFERENCE: 0643-2005

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	19618
Name of Scheme:	Federation Court
Address of Scheme:	32 Government Road LABRADOR QLD 4215

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

George and Stephanie Miller, the Owners of lot 6

I hereby order that the AGM scheduled for 20 September may proceed; I further order that motions 10,11 and 12 (including any amendments made pursuant to section 57 of the Body Corporate and Community Management (Standard Module) Regulation 1997) may be voted upon at the AGM; I further order that owing to the possibility that resolutions based upon motions 10, 11, and 12 could be invalid, the Body Corporate is to refrain from carrying out resolutions based on these motions until a final order has been made.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0643-2005

"Federation Court" CTS 19618

THE APPLICATION

The co-owners of Lot 6 in this scheme, (the Applicants) have made a dispute resolution application to the Commissioner for Body Corporate and Community Management under the Body Corporate and Community Management Act 1997 (the Act). The Applicants state that interim and final orders are sought in respect of Motions 10, 11 and 12 on the agenda for the forthcoming AGM.

Motion 10 reads as follows:
Fence Repairs
That the damaged dividing fence from unit 4 towards unit 6, be repaired, and that the following quotations be considered and one quote accepted:
(A) Glen Harvey $415
(B) MINC Services $911

Motion 11 reads as follows:
Quarterly Garden Maintenance
That the gardens be cleaned, pruned, trimmed and weeded quarterly and that Glen Harvey be engaged at a cost of $245 per visit.

Motion 12 reads as follows:
Unit 2 Fences – Termite Inspection & Treatment
That the dividing fences for unit 2 be inspected and treated for termites and the common areas be inspected and the quote from First Choice Pest Control of $330 be accepted.

The applicants are seeking an order that motions 10 & 12 be declared void and that the committee be required to review the issues of these motions in light of new information not available to the committee at the time these motions were proposed.

The report prepared by First Choice Pest Control states termite activity is evident in the internal fence between units 2 & 3, some fence posts on the northern perimeter and the electricity lead-in pole.

It is claimed that

• the fence between units 2 & 3 is the responsibility of the respective owners, and further, that the fence is dilapidated and should be replaced by the respective owners in accordance with section120(2) of the Standard Regulation Module;
• it is unclear what a "regular inspection" of the common areas would involve as there is little common area apart from the perimeter fence and driveway;
• there is no mention in the quote from First Choice Pest Control of whether the "electricity lead in pole" requires treatment;
• The First Choice Pest Control report that the fence posts on the northern perimeter are termite damaged and unstable, adds a new dimension to the adds a new dimension to the original decision of the committee to submit two quotes for fence repairs to the AGM;
• Neither quote includes replacement of the termite damaged posts as this was not known at the time of the committee resolution;
• Glen Harvey’s quote does not include replacement of any posts, refers to "Body Corporate Area Only" and did not include the section along the side of the rear courtyard of unit 6;
• The difference in the scope of the 2 quotes is reflected in the large difference in the quoted prices;

• Motion 10 does not make it clear whether the two quotes represent the full cost of repairs or only the body corporate’s contribution to the repairs as required by the Dividing Fences Act.
• It is therefore submitted that motions 10 & 12 should be declared void.

The applicants are also seeking orders that

• the secretary obtain a written quote from Mr Glen Harvey for quarterly garden maintenance for consideration at the AGM on 20 September 2005;
• the written quote be distributed prior to the AGM; and
• Mr Harvey defer his proposed attendance at the property on 9 September pending a decision of members of the AGM.

The grounds for seeking these orders are as follows:

• No written quotation has been provided to the committee or distributed to members;
• The amount of $245 per quarter ($980 per annum) is above the level for committee spending and must be determined in a general meeting;
• Mr Harvey was invited to submit a quote but has not done so. Therefore owners are being asked to make a decision at the AGM without a written quote but on the basis of a verbal agreement between the secretary and contractor.

THE "FEDERATION COURT" COMMUNITY TITLES SCHEME

The "Federation Court" community titles scheme was originally created under a group titles plan of subdivision (now known as a standard format plan) registered on 14 May 1993. The scheme land consists of six lots and common property and is primarily used for residential purposes.

A standard community management statement was recorded for "Federation Court" on 15 July 2000 and shows that the Act’s Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) applies to the scheme.

JURISDICTION

Section 227(1)(b) of the Body Corporate and Community Management Act 1997 (the Act) provides that a dispute between an owner or occupier of a lot and the body corporate, is a dispute which may be resolved under the dispute resolution provisions of the Act.

Further Section 227(1)(g) of the Act provides that a dispute between a committee member and the body corporate, is a dispute which may be resolved under the dispute resolution provisions of the Act.

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) & (2) provide that -

(1) The 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.

Examples

1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.

2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.

(2) An interim order

(a) has effect for a period (not longer than 1 year) stated in the order; and

(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and

(c) may be cancelled by a later order made by the adjudicator; and

(d) if it does not lapse or is not cancelled earlier, lapses when

(i) the application is withdrawn; or

(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or

(iii) a final order is made by an adjudicator to whom the application is referred. ...

INTERIM ORDERS

This dispute resolution application was received on 7 September 2005. The Commissioner has referred the matter to me pursuant to section 267 of the Act for consideration for an interim order. At this time, I am concerned with the threshold issue of whether an interim order is warranted. In any consideration of an application that seeks the making of an interim order, it is necessary to determine whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279 are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

DETERMINATION

The application seeks orders that motions 10 & 12 be declared void as, in their present form, the motions may be deficient or misleading.

The applicants also seek an order that the committee be required to review these motions in light of new information not available to the committee at the time these motions were proposed.

Having reviewed the application I am concerned that the 3 motions may be deficient or misleading.

Motion 11

This motion reads as follows:
That the gardens be cleaned, pruned, trimmed and weeded quarterly and that Glen Harvey be engaged at a cost of $245 per visit.

The first matter for consideration in relation to this motion is whether this expenditure could be approved by the committee and therefore does not require a resolution of the body corporate.
Section 103 of the Standard Module regulation provides that
(1) The committee may only carry out a proposal involving spending above the relevant limit for committee spending for the scheme ($125 x no. of units i.e. $750) if-
(a) the spending is specifically authorised by ordinary resolution of the body corporate....

(2) For this section, 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 committee spending if the cost of the project, as a whole, is more than the relevant limit.

Motion 11 would appear to contemplate that Mr Harvey would be engaged for a period of 12 months and presumably, this is the reason why the motion has been prepared for submission to the AGM.

From the information provided, it would appear to me that Mr Harvey could be regarded as a "Service Contractor" within the meaning of section 15 of the Act which provides:
A person is a service contractor for a community titles scheme if the person is engaged by the body corporate (other than as an employee of the body corporate) for a term of at least 1 year to supply services (other than administrative services) to the body corporate for the benefit of the common property or lots included in the scheme.
Examples of services that might be provided by a service contractor--
1. Caretaking services.
2. Pool cleaning services.

The engagement of a service contractor (as defined) is governed by sections 78 of the Standard Module Regulation which provides as follows:

78 Form of engagement
(1) The engagement of a person as a body corporate manager or service contractor is void if the engagement does not comply with the requirements stated in subsection (2).
(2) The engagement must--
(a) be in writing; and
(b) state the term of the engagement, including--
(i) when the term begins and when it ends; and
(ii) the term of any right or option of extension or renewal of the engagement; and
(c) state the functions the body corporate manager or service contractor is required or authorised to carry out; and
(d) state the basis on which payment for the body corporate manager’s or service contractor’s services is to be worked out;

On the information provided, it would appear that the proposed engagement of Mr Harvey cannot be voted upon in the absence of a written engagement as contemplated by section 78.

Motion 10 provides as follows:

That the damaged dividing fence from unit 4 towards unit 6, be repaired, and that the following quotations be considered and one quote accepted.

The applicants have pointed out that this motion is deficient for the following reasons:

• Part of the contemplated work (i.e. the fence between units 2 & 3) is not a body corporate responsibility;
• Neither quote includes replacement of the termite damaged posts as this was not known at the time of the committee resolution;
• Mr Harvey’s quote does not include replacement of any posts and did not include the section along the side of the rear courtyard of unit 6.
• The motion does not specify whether the two quotes represent the full cost of repairs or only the body corporate’s contribution to the repairs as required by the Dividing Fences Act.

Motion 12

Unit 2 Fences – Termite Inspection & Treatment
That the dividing fences for unit 2 be inspected and treated for termites and the common areas be inspected and the quote from First Choice Pest Control of $330 be accepted.

The applicants have pointed out that this motion is deficient for the following reasons:

• the fence between units 2 & 3 is the responsibility of the respective owners,
• it is unclear what a "regular inspection" of the common areas would involve; and
• there is no mention whether the "electricity lead in pole" requires treatment;

On the face of the information provided to date, there is a strong possibility that resolutions based on motions 10 and 12 could be invalid because there is insufficient detail upon which to make an informed decision and further, it would appear that part of the work contemplated is not the responsibility of the body corporate.

On the other hand however, the Act contemplates that an adjudicator will make decisions in accordance with the rules of natural justice. In this regard section 243 of the Act provides that the respondent (i.e. the body corporate), and other affected persons, should be provided with a copy of the application and afforded with an opportunity to respond.

Section 243 provides as follows:
Notice to affected persons and body corporate
(1) The commissioner must give written notice (the original notice) of the application to
(a) the body corporate; and
(b) each affected person who is not entitled to be given a copy of the notice under subsection (4).
(2) The original notice must
(a) include a copy of the application; and

(b) invite each person who is given the original notice, or a copy of it under subsection (4), to make written submissions to the commissioner about the application within a stated time.

While the committee are welcome to provide a submission to this Office on the application before the AGM should they wish to do so, I realise that it may be unrealistic to expect a considered response from the Committee prior to the AGM which is due to be held on 20 September as this would require dissemination of the application and supporting material, a meeting of the committee, liaison with the body corporate manager, examination of body corporate records and preparation of a response.

While the requirement to seek submissions on an application for an interim order may be dispensed with under section 247 of the Act, I am reluctant to order that the scheduled Annual General Meeting not go ahead without giving the respondent the opportunity to argue its case and present evidence on its behalf.

It should also be noted that section 57 of the Standard Module Regulation gives persons present at the AGM the power to amend motions put to the AGM. However, It should be noted that subsection 57(3) provides that the votes of all persons who are not present personally or by proxy at the meeting, but who would, if present, have the right to vote, must be taken to have voted against the motion.

Section 57 of the Standard Module provides:
Amendment of motions at general meetings

(1) A motion may be amended at a general meeting by the persons present, and having the right to vote, at the meeting.
(2) However, an amendment cannot be made that changes the subject matter of the motion.

(3) In counting the votes cast for and against a motion to amend a motion, or an amended motion, all persons who are not present personally or by proxy at the meeting, but would, if present, have the right to vote, must be taken to have voted against the motion.

In addition, section 47 of the Standard Module Regulation requires the person chairing the meeting to rule a motion out of order if the motion, if carried would be contrary to the Act or Regulation or otherwise unlawful.

On balance, I believe the most appropriate course of action is to allow the AGM to proceed and consider motions 10,11 and 12 including amended motions, but subject to the qualification that the body corporate is to refrain from carrying out resolutions of the meeting based on motions 10,11 and 12 pending the making of a final order.

Submissions will be sought from all parties prior to making the final order.

Orders
For the reasons outlined above, I propose to order as follows:

• That the AGM scheduled for 20 September may proceed;
• Motions 10,11 and 12 (including amended versions of those motions) may be voted upon;
• However, owing to the possibility that resolutions based upon motions 10,11, and 12 could be invalid, the Body Corporate is to refrain from carrying out resolutions based on these motions until a final order has been issued.