The River Gallery Apartments [2005] QBCCMCmr 69 (8 February 2005)

Last Updated: 5 July 2005

REFERENCE: 0087-2005

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28856
Name of Scheme:	The River Gallery Apartments
Address of Scheme:	55 Little Edward Street SPRING HILL QLD 4004

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

Kevann Pty Ltd, the caretaking service contractor for the scheme

I hereby order that, notwithstanding any decision by the committee to withdraw its motion 13 concerning proposed entry into a caretaking and letting agreement with Kevann Pty Ltd (applicant), the body corporate is to facilitate a ballot on that motion proceeding at its annual general meeting later today. I further order that, should motion 13 be passed at the annual general meeting, the body corporate is to refrain from acting on that resolution pending a final determination in respect of this dispute. 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 This order will automatically lapse upon a final order being made or this application being withdrawn.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 0087-2005

"The River Gallery Apartments" CTS 28856

Interim Application

The River Gallery Apartments Community Titles Scheme (River Gallery) is a 100 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Standard Module Regulation (Standard Module).

This is an application for interim orders. It arises out of an application by Kevann Pty Ltd ACN 091 693 195, the caretaking service contractor for the scheme (applicant) seeking orders against the body corporate for River Gallery (respondent).

Interim Orders Sought

The applicant is the caretaking service contractor for River Gallery pursuant to a deed of assignment dated 2 September 2002 and the corresponding caretaking agreement dated 14 December 2000.

This dispute has arisen from a committee decision to withdraw a motion that it had proposed for consideration at the annual general meeting of River Gallery. The motion proposed that the body corporate enter into and execute a new caretaking and letting agreement with the applicant. The explanatory note to this motion stated "The current managers have asked to extend the term of their current Agreements. This needs to be done by way of entering into new Agreements. The proposed new Agreements are for a 10 year initial term. The commencing salary is based on the current salary being paid plus CPI".

It appears that the committee initially supported this motion but has now decided not to support the motion and to have it withdrawn from consideration by owners.

Submissions

The applicant has provided submissions to the effect that:

• If a motion is submitted it must be included on the next general meeting agenda on which it is practicable to include the motion and the motion cannot then be withdrawn from consideration; and
• The applicant negotiated with the body corporate for a period of approximately two months in order to reach agreement on the appropriate terms and conditions for a varied caretaking and letting agreement. If the committee had not put forward the motion proposing the new caretaking agreement then the applicant would have put forward the motion to owners. It would therefore be unconscionable for the committee to withdraw the motion and deprive the applicant of the opportunity to have this new agreement considered by owners.

The applicant’s complete application was only received by this office today and the annual general meeting is to be held this afternoon. There was therefore very little time in which to obtain submissions from the body corporate in relation to the interim orders sought. However, a copy of applicant’s grounds was sent by facsimile to the body corporate secretary and I held a teleconference between the body corporate secretary and the applicant’s representative. The body corporate secretary made submissions to the effect that:

• The committee originally supported the motion but has decided to withdraw the motion because it was concerned about some of the differences between the terms of the existing caretaking service contract and the proposed new contract;
• The committee put forward the motion and therefore should be able to withdraw the motion; and
• The applicant did not lose an opportunity to put forward its own motion because, if the applicant was to put forward its own motion, it would have had to do that prior to the end of the previous financial year of the body corporate. However, the committee put forward its motion only after this time.

Decision

Interim injunctive 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 applicant is seeking orders of an injunctive nature designed to allow the vote to proceed on whether owners wish to enter into the new caretaking service contract. For it to be just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I would need to be satisfied that the application raises a serious question to be determined. I would also need to be satisfied that the balance of convenience between the parties justifies the grant of injunctive relief. That is, I would need to balance the inconvenience to the body corporate of requiring voting to proceed against the inconvenience to the applicants of waiting until a final determination to grant any necessary orders.

Serious question to be determined

I am satisfied that the applicant has raised serious questions to be determined regarding whether the committee should be entitled to withdraw the motion from consideration by owners. The motion is on the agenda for the meeting and, on its face, is a valid and enforceable motion. The decision by the committee to withdraw the motion from consideration by owners appears to have been made in only the last couple of days and it is likely that some owners will already have voted on that motion. It is arguable that a withdrawal of the motion would unfairly prejudice the applicant.

A proper determination of this question will, however, require full consideration of the issues raised and all owners should be given an opportunity to make submissions on these issues.

Balance of convenience

Holding of ballot

The applicants have established that there is a serious question to be determined regarding whether the committee is entitled to withdraw the motion from consideration by owners. However, to gain an interim order the applicants will also need to establish that the balance of convenience favours allowing the vote on the motion to proceed.

If it were ultimately determined that the vote should have proceeded then there would be inconvenience to the applicant in not requiring the vote to proceed today. However, I am also aware that there may be significant inconvenience to the body corporate if an interim order was made requiring the vote proceed, the body corporate ultimately entered into the agreement pursuant to a favourable vote, but the final determination of this office was that the vote need not have proceeded.

In the circumstances, the balance of convenience appears to favour an order that will merely preserve the rights of parties as far as possible pending a final determination. That is, an order that will allow the vote to proceed but require that the motion, if passed, not be implemented pending a final determination of whether the applicant was entitled to require that the vote proceed. I therefore intend making an order to this effect.

Replacement of returning officer

One particular concern with the proposed order is that the body corporate secretary has said that the returning officer appointed to determine the vote was told by the committee that he is no longer needed and that returning officer is now unable to attend the meeting. In this respect, the applicants’ representative has informed this office that they should be able to arrange for an alternative returning officer and the body corporate secretary has said that he expects that the current returning officer will be able to liaise with any replacement returning officer to arrange for proper conduct of the ballot.

The legislation provides for the appointment and functions of a returning officer but does not appear to contemplate arrangements for a replacement returning officer if the original returning officer becomes unavailable. This may result in questions about the validity of appointment of a replacement returning officer, particularly if there is insufficient time for the body corporate to pass a resolution authorising this replacement. However, an adjudicator is required to make an order that is just and equitable in the circumstances and non-compliance with the legislation 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] Further, secret voting documentation must be retained by the body corporate and can be inspected by an adjudicator before the making of a final determination (Standard Module, 149). Provided that the secret ballot appears to have been properly conducted I would consider there to be strong grounds for an order by an adjudicator that the result of the ballot is to stand notwithstanding any defect in the appointment or replacement of the returning officer. Therefore, if on final determination the applicant establishes that it was entitled to require the vote to proceed then final orders could be made to the effect that the result of the ballot must stand.

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.