Diamond Sands [2005] QBCCMCmr 681 (2 December 2005)

Number of Scheme:	17335
Name of Scheme:	Diamond Sands
Address of Scheme:	2320 - 2330 Gold Coast Highway, MERMAID BEACH QLD 4218

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

I hereby order that the application for orders -

1. "that a new election of officers be called for and a special meeting be held to confirm all appointments;" and
2. "that until such time as a special meeting is held, the previous chairman and committee continue as officers for Diamond Sands" are dismissed.

I further order that the committee as listed in the minutes of the annual general meeting held on 22^nd July 2005 is the committee for the scheme and that valid resolutions made by that committee since 22^nd July 2005 bind the body corporate.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0523-2005

"Diamond Sands" CTS 17335

THE APPLICATION

This is an application dated 20^th July 2005 and amended on 10^th August 2005 by Gavin Douglas (the applicant) co-owner of Lot 49 in the scheme, against the body corporate for the scheme (the body corporate) for an order that a general meeting be called wherein nominations for committee be called and a "special meeting to confirm all appointments" takes place.

JURISDICTION

"Diamond Sands" CTS 17335 is a community titles scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module). There are 93 lots in the scheme created under a building unit plan of subdivision.

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)).

The applicant, who lives in New Zealand, says that "a large number" of lot owners did not receive their nomination forms for voting for the committee at the annual general meeting held on 16^th July 2005 by the closing date for nominations at the end of the financial year (30^th April 2005). Those lot owners included the "current chairman and some committee members." He did not receive his nomination papers until "late May 2005", the forms being posted out by Body Corporate Services (the body corporate manager) on 6^th May 2005, which was after the closing date.

The applicant enclosed with his application a photocopy of the envelope in which his nomination papers were received. The envelope is stamped "6^th May 2005" and "Australia –postage paid." It appears to be a copy of a largish envelope with a sticky label bearing the name "Mrs C. Douglas" and the applicant’s address

The agenda for the "Budget Committee Meeting" to be held on 14^th May 2005 (the committee meeting) stated that by the closing date on 30^th April 2005, only the following nominations had been received:
Chairperson – John Belcher, and Ordinary members- John Belcher, Denis Fieldhouse, Marjorie Job and Ray Stock.

At the committee meeting, a number of members of the committee questioned the body corporate manager as to why all owners had not received voting and nomination papers on time. The body corporate manager representative could not explain it. She said that the nominations which had been received by the closing date could not be challenged, but that where there were no nominations for a position she would accept nominations out of time.

Whilst the committee minutes do not show that any discussion took place, the committee minutes state that " nominations as at closing date of 30^th April 2005" are:-
Chairman – John Belcher
Secretary – Gavin Douglas
Treasurer – Lance Cooper
Ordinary Members - John Belcher, Denis Fieldhouse, Marjorie Job, Janice Samuels and Ray Stock.

The applicant says that the only nomination received in fact by 30^th April 2005 for chairman was for John Belcher, who subsequently was appointed chairman for the scheme at the annual general meeting on 16^th July 2005. (the 2005 AGM). John Belcher owns the management rights to the neighbouring resort "Turtle Beach Resort" and the applicant is concerned that John Belcher’s position as chairman of Diamond Sands may give rise to a conflict of interest.

The 2005 AGM was adjourned for one week as a quorum was not present. However, the applicant, who was present, took the opportunity of discussing with those lot owners present that his nomination forms had not been posted until 6^th May 2005. The minutes record that in the general discussion, the applicant said that he would have nominated the then current chairman Mr Cooper, for chairman "who would have been elected." Mr Belcher was asked by Mr Melville, the building manager, to withdraw his nomination for chairperson, but Mr Belcher refused to do so.

At the reconvened 2005 AGM on 22^nd July 2005, those mentioned in the committee minutes of 14^th May 2005 were appointed as committee members, with no election taking place.

The applicant feels that the body corporate manager was wrong to refuse to send out further nomination papers, and that the way in which the nominations were received was mismanaged and unsatisfactory.

Submissions were invited from all lot owners in accordance with section 243(2)(b) of the Act. Submissions were received from John Belcher,(Mr Belcher) owner of lot 85; Christine and Les Lambert, (Mr and Mrs Lambert) owners of Unit 14; Alan Boyd, (Mr Boyd) lot owner; Roberta Greenwood, owner of Unit 24; Murray and Jillian Jenkin (Mr and Mrs Jenkin), owners of unit 63; Roger Jarvis (Mr Jarvis) owner of Unit 78; and Peter Melville (Mr Melville) on behalf of Brittan Street Holdings Pty Ltd, owner of units 1,3 and 16 .

David Gordon for the body corporate manager also made a submission.

Mr Belcher, who is now chairman of the committee, says his nomination form which arrived before 30^th April 2005, arrived in an envelope with a "window" and not in a large envelope such as the one submitted by the applicant. The envelope submitted by the applicant was the type of envelope posted on 6^th May 2005 which enclosed the agenda for the committee meeting. He says that since the envelope was posted "from the Gold Coast Offices of Body Corporate Services", he deduces that this was the envelope in which the agenda for the committee meeting was sent out, and since the applicant’s address is correct, he must have received the earlier envelope containing the nomination papers. He adds that despite all, "Mr Douglas, L.Cooper and J.Samuels are on the committee this year" and all members are meeting amicably and functioning as a committee so it should be allowed to get on with its job.

However, Mr and Mrs Lambert say that election "lacked integrity and transparency" and that there should be another election for office bearers, which they feel would be of minimal cost and "not disadvantage any lot owner."

Mr Boyd supports the applicant but had nothing to add. Ms Greenwood, who lives partly at Diamond Sands and partly in New Zealand says she "did not receive nomination forms for election of officer." since she was in New Zealand "until 1^st June 2005." I do not know whether she did not receive nomination papers at all, or did not receive them because she was overseas.
She too supports another election to resolve the matter.

Mr and Mrs Jenkin, who also live in New Zealand, say they did not receive committee nominations until after 30^th April 2005 by which time it was too late even to fax them back to the body corporate manager.

Mr Jarvis says he supports the applicant and says that "it seems the only proper course of action" to have another election. His concern is that based on the applicant’s submissions, the committee has no "credibility with this cloud hanging over them". He cannot say with any certainty "if or when" he received his nomination papers. He recommends another election even if there is some cost involved.

Mr Melville, who is the representative of Brittan Street Holdings which holds the management rights and is building manager at the complex, says that the body corporate manager at the committee meeting said that all committee positions nominated would be appointed without election as the number of nominations received was less than the required number to form the committee. He said that "several owners" had contacted him prior to the committee meeting saying they had not received their nomination forms. There was discussion at the meeting but this does not appear in the minutes. The committee discussed the possibility of postponing the 2005 AGM so that nomination papers could be prepared again, but the body corporate manager said that "this means of resolving the problem was not allowed for in the Body Corporate Act." After further discussion, the body corporate manager agreed that it "would be OK to add further names to nominations for the positions of secretary, treasurer and committee members after the closing date.... but not to add a second nomination to the position of chairman." There were no nominations called from the floor at the 2005 AGM. He feels that "harmony would be restored" if those owners who did not receive nomination papers could now nominate and an election to take place.

The body corporate manager submits that forms inviting nominations were lodged at a post office in Sydney on 30^th March 2005 by Security Mail. The forms were sent out in a "DL size window" envelope and not in an A4 envelope. The envelope which is submitted by the applicant is the type used for agenda mail-outs and he has records to show that there was a mail-out for the agenda of the committee meeting sent on 6^th May 2005, posted from the Southport office of the body corporate manager. The body corporate manager had not been notified by owners of any non-receipt of nominations prior to at the committee meeting and at the 2005 AGM.

DETERMINATION

Since the applicant made no reply to submissions, I sought a response from him concerning the discrepancy raised by Mr Belcher and the body corporate manager concerning the size and style of envelope. The applicant states that the large envelope addressed to "Mrs C. Douglas" and dated 6^th May 2005 contained both the agenda for the committee meeting and the nomination forms. He confirmed that the nomination forms were sent to him after the closing date for nominations and both documents were sent in that one envelope.

It is apparent that if "a large number" of lot owners did not receive their nomination papers on time, "a large number" of lot owners are not concerned by this. In particular, it is noteworthy that Mr Cooper, who was the previous chairman for the scheme, and should be most aggrieved by his failure to be able to nominate himself for a further term, has not made a submission. I note that Mr Cooper is now on the committee as Treasurer.

Further, it seems to me strange that those most interested in the management of the scheme, (especially Mr Cooper who was chairman, secretary and treasurer at the time), did not realise that the time for the AGM was approaching and that nominations for committee should be lodged. Mr Cooper could of course have nominated himself, and was in an ideal position to do so.

I do not doubt in any way the applicant’s version of events, and find that there was clearly some administrative failure in the act of sending out nomination papers, whether by the body corporate manager or the post office mail centre is unknown. Mr Belcher’s deduction that the envelope posted to the applicant on 6^th May 2005 came " from the Gold Coast Offices of the body corporate" is inconclusive, since the envelope does not carry a Gold Coast postmark but merely bears the printed name and address of the sender.

I also find that the correct procedure with regard to nominations for committee was not followed in that where insufficient executive members are nominated, the chairman of the meeting should invite either written or oral nominations from the floor of the general meeting. Section 20 Accommodation Module states as follows -

(2) If for the position of chairperson, secretary or treasurer, there has

(6) If, on a counting of votes, 2 or more persons each receive an identical

way the meeting decides.

Any lot owner who had not received the nomination papers on time, or who, subsequent to the closing date, but before the meeting wished to make a nomination, could have had his or her written nomination papers included, and an election for executive office bearers would have taken place. This would have solved the problem with regard to a democratic vote for the "empty" positions of secretary and treasurer.

In the case of the chairman, where only one nomination was received for Mr Belcher, it would have been prudent, (and fair to Mr Belcher) to make all lot owners aware of the claim that there would have been other nominations if all lot owners had received their nomination papers in time to nominate. In those circumstances, further nomination papers could have been accepted, and an election held (presumably Mr Belcher did not expect to be elected unopposed, so there would have been no detriment to him) or whether this process should have been followed could also have been put to the vote by those present. It would appear to me that only Mr Belcher might have been aggrieved by this process, had he not been elected, and it would have been open to him to challenge such reparatory action to this office.

Where things go wrong, and a set procedure is not followed, the legislation is silent. In such prescriptive legislation as the Act and associated modules, as has been noted by Dodds J in Wei-Xin Chen v Wishart Village^[1], some times things will go wrong.

"The very detailed provisions of the standard module regulation to which I have referred above make it almost inevitable that from time to time there will be non-compliance. Equally though, the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bone fide. "

The test is to ask if any lot owner acted to his or her detriment because of the mistake? If so, might the outcome be at all different, if those owners who suffered such detriment, be allowed to proceed as if the correct procedure was followed? Finally, the balance of convenience between those persons who claim they have suffered some disadvantage and the remainder must be regarded.

Of the submissions received, whilst there is support for the applicant that the elections at the annual general meeting "lacked transparency", only Mr and Mrs Jenkin say that they did not receive nomination papers until after 30^th April 2005. Mr and Mrs Lambert do not say whether or not they received their own nomination papers in time; Ms Greenwood says that she was away, but does not explain whether nomination papers were in fact delivered to her address on time. Neither Mr Jarvis nor Mr Melville say they suffered any detriment, only that the elections were not carried out satisfactorily. The " several owners" mentioned by Mr Melville have not apparently made submissions.

I also note, that it is not recorded in the 2005 AGM minutes ( although these might not be entirely reliable as what was being recorded was a " general discussion" and there was no duty to record such discussion as part of the minutes of a general meeting) that other owners had not received their nomination papers or had felt discriminated against because of that.

In short, the objection to the correct procedure not being followed is, unfortunately for the applicant, neither strong enough, nor specific enough with regard to detriment suffered. It is often the case that the majority of lot-owners, particularly in a well-run scheme, are simply not interested in the process of management. If I was to order that a new election process takes place, this would involve the body corporate in considerable expense, and the outcome might not be any different.

Further, the passing of time since the 2005 AGM, which invites no fault on the part of the applicant, means that Mr Belcher is now established in his role as chairman, and the status quo should be preserved . A new election raises doubts as the legality of actions taken by the current committee since July.

The position of chairman holds no priority or casting vote. The chairman is equal to other committee members, so if there is concern about the direction taken by the chairman, the remainder of the committee can vote against the chairman. The chairman is also, in usual circumstances, only in position until the next annual general meeting, or can be removed from office by motion put to a general meeting (section 23(2)(f) Accommodation Module).

If the committee wishes to call an extraordinary general meeting at which the motion is to seek a re-election of the entire committee or members of the committee or appoint specific lot owners to the committee, until the next annual general meeting, it may do so, but I shall not so order. By virtue of section 59 Accommodation Module, 25% of lot owners may also request an extraordinary general meeting be held, and any lot owner may propose motions to the meeting in the usual way.

The current committee may like to direct the body corporate manager with regard to the mail out procedures proposed for the next annual general meeting.

Until such time, I order that the current committee as listed in the minutes of the 2005 AGM, is the committee for the scheme and that valid resolutions made by that committee since the 2005 AGM bind the body corporate.

With regard to Mr Belcher owning the management rights to neighbouring resort Turtle Beach, there is no inherent reason why he should not be chairman of the scheme if he is a lot owner. A committee member is obliged to declare an interest and unable to vote at a committee meeting on any matter in which he has a direct or indirect interest. (section 32 Accommodation Module).

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Diamond Sands [2005] QBCCMCmr 681 (2 December 2005)