Pacific Keys Central [2005] QBCCMCmr 640 (16 November 2005)

Last Updated: 16 January 2006

REFERENCE: 0508-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10021
Name of Scheme:	Pacific Keys Central
Address of Scheme:	54 Hooker Boulevard MERMAID WATERS QLD 4218

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Russell Sayers, a co-owner of Lot 44

I hereby order that the application for an order by Russell Sayers, a co-owner of Lot 44 seeking an outcome to invalidate Motion 2 on the agenda of the Extraordinary General Meeting dated 18 April 2005, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0508-2005

"Pacific Keys Central" CTS 10021

APPLICATION

This application is by Russell Sayers, a co-owner of Lot 44 (applicant) against the body corporate (respondent). The applicant is seeking an outcome to invalidate Motion 2 on the agenda of the Extraordinary General Meeting dated 18 April 2005 (EGM).

JURISDICTION

"Pacific Keys Central" Community Titles Scheme 10021 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)).

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 a number of lot owners. The applicant made a written reply to submissions under section 244 of the Act.

DETERMINATION

The body corporate, at the Annual General Meeting dated 20 September 2004 (AGM) carried Motion 10 submitted by the committee to vary the Caretaking and Letting Agreement dated 28 August 2001 by replacing Clause 20 to require the building manager to indemnify the body corporate against death, injury, loss or damage suffered or incurred by the body corporate due to any act or omission by the building manager. The body corporate also voted to defeat Motion 12 submitted by M&H Hayward of Lot 1 which sought a variation of the caretaking and letting agreements by amendment to Clauses 17, 17.4 and 20.

Subsequent to the AGM, an application was made under the dispute resolution provisions of the Act (Ref. No. 0700-2004), and on 18 February 2005, Adjudicator Meek made the following order, quote:

I hereby order that the application by:

•	Mark Thomas Hayward and Heather Whitehurst Hayward, the co-owners of lot 1;
•	John Ratner and Katrina Anne Ratner, the co-owners of lot 12; and
•	Dean Anthony Cowley, the owner of lot 60

for orders quote –

1.	A declaration that motion 10 at the AGM on 20 September 2004 is invalid and an order preventing the body corporate for PKC CST 10021 from actioning such a motion;
2.	A declaration that motion 12 of the AGM held on 20 September 2004 was validly passed and an order requiring the body corporate to action such motion;
3.	A declaration waiving any penalty payment on unit 60 until the issue has been resolved,

is dismissed.

I further order that within two (2) months of the date of this order, the body corporate of Pacific Keys Central shall convene and hold a general meeting of the body corporate at which it will re-consider and determine motion 12 headed Variation of Caretaking and Letting Agreements submitted to the AGM of the body corporate on 20 September 2004.

I further order that if the owners of lot 1, Mark Thomas Hayward and Heather Whitehurst Hayward (Hayward) require changes to the motion previously submitted, then the body coprorate secretary shall accept changes to the motion as submitted by Hayward, provided such changes are submitted to the secretary, in writing and in their full form, within 2 weeks of the date of this order.

I further order that at the meeting ordered to be convened, the body corporate may consider any other motion validly included on the agenda of the meeting.

In the Statement of Adjudicator’s Reasons for Decision, Adjudicator Meek relevantly stated, quote:

I intend to dismiss the application in respect of motion 10...As a statement of the body corporate’s position, it is enforceable. However, it is not enforceable against the Haywards as the holders of the management agreement. That is, the body corporate cannot insist on the terms of the variation being included in the agreement. This is so on the basis of privity of contract – only by mutual agreement between all parties to an agreement can the terms of an agreement be varied...In the circumstances, I am prepared to allow the resolution to stand as a statement of the body corporate’s position. Perhaps the applicant’s concern with this motion is that it is in conflict with their own proposal regarding profession indemnity insurance. However, I consider that the seeming issue of conflict is resolved simply by the carrying of a subsequent resolution; that is, a body corporate can amend or revoke an early resolution by passing a further resolution (see section 58 of the standard module).

Motion 12

I intend to order that the body corporate shall resubmit the motion to an EGM within 2 months of the date of this order. Whilst this is an outcome that neither party (the applicants nor the body corporate) has sought, I conclude that in the circumstances it is just and equitable that such an order be made. In respect of the applicants’ submission, I consider that the evidence submitted is insufficient to warrant the validation of the motion. Shortly I will outline my reasons for this. However, I also conclude that it would be unreasonable to allow the status quo to prevail, the reasons for which I will also outline...Given the above considerations, I find that there is insufficient evidence on which I am prepared to rely to satisfy me that the motion would have been carried. Conversely, I am not prepared to simply allow the outcome to stand. There is sufficient uncertainty regarding the motion to require that it again be put to the body corporate in general meeting. I do not consider it appropriate to wait a further 7 or so months till the AGM for the matter to be reconsidered. I further intend to order that the meeting to be convened might include any other motion validly submitted for inclusion on the agenda of a general meeting.

The EGM would appear to have been held in compliance with the terms of the above Order. At the EGM, the body corporate considered Motion 2 relating to a variation of the caretaking and letting agreements which was submitted by M&H Hayward, of Lot 1. Motion 2 sought a variation of the agreements by amending Clauses 17, 17.4, and 20 of the Caretaking and Letting Agreement dated 28 August 2001 and was carried by 40 votes to 18.

On 19 July 2005, this application was made under the dispute resolution provisions of the Act. Section 242(2) of the Act imposes a time limit of within three months of the applicable general meeting in the event that the application seeks an outcome to void a resolution of the body corporate. Despite this requirement, section 242(3) of the Act provides that an adjudicator may, for good reason, waive non-compliance with section 242(2). The application was made one day outside the time limit specified in section 242. The applicant has explained the circumstances of the timing of the lodgement of the application. Given that the applicant is entitled to make an application seeking the relief stated in the outcome sought, I consider that the shortness of the delay is good reason to waive the time limit and to proceed with the adjudication of the dispute.

The applicant seeks to invalidate Motion 2 on the basis that the Motion contained two separate subject matters and owners who wished to vote against part of the subject matter of the Motion were forced to vote against another part of the subject matter of the Motion. The applicant submits that as the Motion was not presented separately, owners either voted for the amendment to all three clauses or against the Motion including the third clause possibly contradicting the vote on Motion 10 at the AGM. The submissions in support of the application stated that Motion 2 was presented in a misleading and ambiguous manner, and that owners were confused due to the decision made on Motion 10 at the AGM.

The consideration of Motion 2 at the EGM would appear to be consequential to the Order made on Application Ref. No. 0700-2004. In making the Order, Adjudicator Meek relevantly stated that the resolution on Motion 10 at the AGM is "a statement of the body corporate’s position". Adjudicator Meek stated that with respect to any conflict with Motion 12, "I consider that the seeming issue of conflict is resolved simply by the carrying of a subsequent resolution; that is, a body corporate can amend or revoke an early resolution by passing a further resolution (see section 58 of the standard module". While Motion 12 was defeated at the AGM, Adjudicator Meek stated that "I am not prepared to simply allow the outcome to stand. There is sufficient uncertainty regarding the motion to require that it again be put to the body corporate in general meeting". The Minutes of the EGM indicate that Motion 2 was passed by 40 votes to 18, and that no other motion was on the agenda relating to this issue.

Motion 2 proposed amendments to the caretaking and letting agreements and required an ordinary resolution in accordance with section 87(2) of the Standard Module. In bundling the three proposed amendments in the Motion, the submitter of the Motion has done nothing more than take a risk that lot owners would support each proposed amendment. The risk in drafting a motion in this way is that a lot owner who disagreed with only one of the proposed amendments could vote against the motion and all of the proposed amendments. Each lot owner, as a member of the body corporate had a right vote on the motion based on that person’s consideration of the Motion and each lot owner certainly was not compelled to vote for the Motion even though the owner may not have agreed with each of the proposed amendments. Given the extent of consideration that has been given to this matter and the resolution on Motion 2, it is not clearly evident that lot owners generally were confused with the drafting of the Motion. The applicant and the supporting lot owners cannot rely on the decision made on Motion 10 at the AGM in claiming that Motion is invalid as Adjudicator Meek found that the resolution on Motion 10 to be "a statement of the body corporate’s position" which "the body corporate cannot insist on the terms of the variation being included in the agreement" and which the "body corporate can amend or revoke...by passing a further resolution (see section 58 of the standard module".

To my mind, the resolution made on Motion 2 clearly evidences the opinion of lot owners with respect to the proposal stated in Motion 2. Based on the grounds submitted by the applicant, I do not consider that the Motion is void and consequently, the application is dismissed.