L'Colonial Court [2005] QBCCMCmr 542 (4 October 2005)

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

I hereby order that the owner of lots 1, 4, 6, 7 and 8, Elsie Jennie Phelps, is only entitled to one nomination for committee, namely of herself, or another lot owner or a person who may be nominated by a lot owner. To remove any doubt, it should be noted that the nominated individual may be nominated for more than one position on the committee.

I further order that from the date of this order and until any or all committee positions are subsequently filled in accordance with the requirements of the legislation, the body corporate committee shall comprise the following persons:
Cindy Barker (Chairperson), Elsie Phelps (Secretary), Denis Degiovanni (Treasurer), Michael Ives (Ordinary Member) and Patricia Shaw (Ordinary Member).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0367-2005

"L’Colonial Court" CTS 9169

ORDER SOUGHT

The applicant has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

That the committee elected at the annual general meeting held on 29 April 2005 be deemed invalid and a new committee as per the result of the ballot allowing one only of Mrs E J Phelps nominees, be included on the committee.

JURISDICTION

The application evidences a dispute between the owner of a lot included in a community titles scheme and the body corporate for the scheme (section 227(1)(b) 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

(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)).

SCHEME DETAILS

L’Colonial registered as a building units plan (now described as a building format plan) on 5 March 1984. It comprises 9 lots and common property, and is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

BACKGROUND

The applicant explained that he and his wife own one lot in the scheme, with a further 3 lots being owned by other individuals, and the five remaining lots all being owned by Mrs E J Phelps. The applicant stated that Mrs Phelps submitted five nominations for positions on the committee prior to the 2005 annual general meeting, when, in his view, she should only have been able to submit one nomination. The applicant requested that Mrs Phelps be required to withdraw the invalid nominations, or alternatively that new committee elections be held.

The body corporate committee and all owners were invited to respond to the application. Two owners lodged submissions supporting the application. A further submission was lodged by Mrs Phelps, which opposed the application. The applicant exercised his right to respond to the submissions.

DETERMINATION

Section 9 of the Standard Module provides:

of the committee.

In this scheme, the required number of members for the committee is at least 3 and not more than 7 (Schedule Dictionary).

At my request, the body corporate manager provided copies of all nominations for committee membership received by the secretary prior to the close of the financial year for 2005. There were nine nominations in all, comprising one nomination from each of the nine lot owners.

Mrs Phelps lodged separate nominations for each of the five lots owned by her. She nominated herself for the position of secretary, and various other individuals for other positions. The four other lot owners (including the applicant) nominated themselves for a variety of positions.

On the basis of these nominations, leaving aside the question of validity, it is unclear to me how Mrs Phelps was elected to the position of chairperson at the annual general meeting held on 29 April 2005, since neither she nor any other owner nominated her for that position.

The question of whether a multiple lot owner could nominate more than one person for membership of the committee has been considered previously by other adjudicators in the Commissioner’s Office.

In Application 0613-2004, which concerned, in part, the validity of the removal of committee members and the filling of resultant casual vacancies on the committee, Adjudicator Young made the following comments in his Statement of Reasons (Order dated 15 February 2005) in relation to whether a multiple lot owner could nominate more than one person for committee membership:

"Section 25E of the Standard Module makes specific provision regarding the nomination of persons to fill vacant committee positions, in stating –

(6) A lot owner may nominate not more than 1 person for election to any of the following--

This provision mirrors the restriction imposed on nominations by lot owners under sections 13(2) and 13A of the Standard Module relating to nominations for annual elections, specifically that a lot owner may only nominate one person (whether themself, another lot owner or a person eligible under section 10) whether to one or more positions (see 13A(2)(b)). It would be incongruous if an owner had a wider nominating power in filling vacancies than for the annual election of committee.

Accordingly, in section 25E the term "to any of the following" refers to the ability to nominate a particular person for different positions, and not multiple persons to a different position each.

In both instances lot owners are limited to one nomination: for individuals, themself or another lot owner or a person who may be nominated by a lot owner; and for persons other than an individual (such as Resort), a lot owner or a person who may be nominated by a lot owner under section 10(b)(ii) or (iii) of the Standard Module.

The person a lot owner may nominate for a vacancy must be eligible to be a member of the committee (see section 25E(1) of the Standard Module). Eligibility for a person where the nominating entity is a corporation, such as Resort, is defined in section 10(1)(b)(ii) of the Standard Module as, apart from a member of the body corporate, a director, secretary or other nominee of the corporation.

That is, Resort is a lot owner and like any lot owner can only nominate one person for one position, or one position and alternative positions. The fact that it owns 4 lots does not allow it to nominate more than 1 person.

The reason for limiting the nominating power of multiple lot owners is explained in the explanatory notes at page 83 -

Clause 131--This clause provides in section 13(2) that a lot owner may, in response to a notice inviting nominations for election of the committee, nominate only one individual. If the nominating owner is an individual, the individual nominated could be the owner themselves, another lot owner, or a member of the owner’s family or a person acting under a power of attorney given by the owner. If the owner is a corporation, the owner may nominate one individual who is a director, secretary or other nominee of the corporation. If the lot owner is a body corporate for a subsidiary scheme in a layered arrangement of community titles schemes, the owner may nominate a representative of the subsidiary scheme. This amendment, and the amendment in clause 128, limits the possibility of a committee being stacked by owners nominating multiple other people for election to the committee. The amendment does not restrict an owner from nominating the individual for more than one committee position.

The provisions relating to nominations by multiple lot owners is analogous to the provisions relating to a quorum in that a multiple lot owner is still only counted as 1 person for the purposes of determining whether a quorum exists or not.

In viewing the removal and replacement appointment motions, the appointment resolution is lawful and effective for the first appointment, that of Paul Brinsmead as chairperson, but the following five appointments are unlawful. In my order I have severed the appointment of Brinsmead from an otherwise unlawful nomination of persons and his appointment in lieu of Margaret Smith stands.

While the removal resolution for all three members could stand, it seems to me that the just and equitable solution in the circumstances (see section 276 of the Act) is for the balance of the removal motion to be dispensed with in that it was based on the false belief that Resort could make appointments to the other two positions as well (and more), and for the former holders of the positions of secretary & treasurer (Jennifer Greenslade) and ordinary member (Alan Dale) retain their positions.

The resulting committee will in fact reflect the highly probable composition of the committee in the future when all three owners (or their individual nominees) will comprise a committee of three.

Accordingly, I have included in my order a declaration that the committee comprises in total Brinsmead as chairperson, Greenslade as secretary & treasurer, and Dale as ordinary member."

I note that Adjudicator Young’s decision has been appealed to the District Court. At the date of making this order, I am not aware that the appeal has been determined. Until such time as the appeal is determined, I do not have the benefit of the learned District Court Judge’s view in relation to whether a multiple lot owner can nominate more than one person for committee membership. The Judge’s findings when they are available will be binding on all adjudicators.

For the present, I share Adjudicator Young’s interpretation of the requirements of the legislation and I find that only one of the multiple nominations by Mrs Phelps is valid.

In this instance, Mrs Phelps nominated herself for the position of secretary, and nominated a number of other people for various other positions. Since I assume that Mrs Phelps would want to be on the committee herself, I have determined that Mrs Phelps’ self-nomination for the position of secretary is valid, and that her remaining nominations are invalid.

Mrs Phelps complained in her submission that if she were to be restricted to one nomination, then she would have only one nomination for five lots, and every other lot owner would have one nomination per lot. She further complained that "instead of one vote per lot, I would have one vote for five lots against four votes for the other owned lots." This statement demonstrates that Mrs Phelps has the two processes confused. The first stage of the process is the nomination process. In my view, Mrs Phelps is limited in relation to this process to one nomination. The second stage of the process is the voting process. Mrs Phelps is not limited in relation to this process, and, provided she is financial at the time of the meeting, she is able to exercise five votes. Therefore, Mrs Phelps will always be able to outvote the other owners in relation to committee elections, and on any motion that requires an ordinary resolution.

An examination of the valid nominations received prior to the 2005 annual general meeting reveals the following nominees:

Chairperson Ms Cindy Barker

Secretary Mrs Phelps and Mr Michael Ives

Treasurer Mr Denis Degiovanni

Committee Ms Cindy Barker
Mr Denis Degiovanni
Mr Michael Ives
Ms Patricia Shaw

Had the nomination process been correctly followed, then Ms Barker and Mr Degiovanni would have been confirmed automatically in the positions of Chairperson and Treasurer respectively at the annual general meeting, as there were no other valid nominations for those positions. In turn that would have resulted in their being ineligible for election as ordinary members of the committee. This is because although one person may occupy more than one executive committee position, that same person cannot also be an ordinary member of the committee.

As there were two nominees for the position of secretary, the meeting would have had to vote to decide the outcome. Mrs Phelps would undoubtedly have voted for herself, as she would have been entitled to do. Even assuming that the other four owners had all voted for Mr Ives, the result would still have been 5-4 in favour of Mrs Phelps. I therefore find that Mrs Phelps would have been elected to the position of secretary.

The ordinary committee member positions would therefore have been filled by Mr Ives and Ms Shaw, without the need for an election, as the number of committee members did not exceed the required number.

This would have resulted in a committee comprising 5 voting members, which would have satisfied the provisions of section 9(3) of the Standard Module in relation to the required number of committee members. Under section 9A of the Standard Module the body corporate manager would automatically have been a non-voting member of the committee.

Mrs Phelps stated in her submission that if the last ballot were held to be invalid, "then I would require that there be an election of a new committee and I will still exercise my statutory right to nominate one person to all three of these (executive) positions."

I am required to make orders that are just and equitable in the circumstances. I have decided that it would be neither just nor equitable to order that fresh elections for committee be held at this stage. Firstly, it is possible to determine an appropriate composition of the committee by the process which I have followed above. Secondly, to order that an extraordinary general meeting be held now so that fresh elections can take place when owners will have the opportunity to nominate for committee again within another five months (for the 2006 annual general meeting) would in my view, be an unnecessary financial impost on the body corporate.

Number of Scheme:	9169
Name of Scheme:	L’Colonial Court
Address of Scheme:	167 Nineteenth Avenue PALM BEACH Q 4221

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

L'Colonial Court [2005] QBCCMCmr 542 (4 October 2005)